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    Published on: April 26, 2016

    by Michael Sansolo

    When is a key not a key? Perhaps when it’s a sign of the future.

    Okay, obviously this one will take some explanation.

    You probably notice we do lots of “Eye Openers” here at MNB - some of them labeled that way, and some of them not - that are based on signs of change that we see in some of the small and big discoveries and encounters that we have each day. Often the indicators border on the mundane, but the implications are significant.

    Which brings me back to the key.

    In this case, the key is one that was given to me at a W Hotel last week.

    My key card bore a strange message, telling me its days as a key are ending. In truth, I travel a lot; I get lots of hotel keys and know they can carry all kinds of messages, ads and then some. Usually I just ignore them, but this one caught my eye.

    On the flip side of the key card I learned why my key was so fatalistic. W Hotels is switching to a new system through which I will be able to use an app to book the room, check in and even unlock my door.

    In other words, my days of waiting in line for my room key or to check out are likely over, which means the two worst parts of most hotel stays are done. After all, there are few things worse than arriving late after a long day of travel and waiting in line simply to get a room. Unless it’s the following morning when I’m in a rush to leave to get to a meeting or catch a flight, the automatic checkout through the phone or television isn’t working and again I’m in a line and it’s not moving…

    I’ve had wonderful stays in hotels punctuated by that long check-in/check-out experience and guess which part I always remember. Sure that’s not fair, but it’s human nature.

    The parallel to the retail checkout experience is pretty obvious isn’t it? And if hotels figure out how to fix this, retail will not be far behind.

    I’m also betting that inside the hotel industry they are doing this with some trepidation because they are eliminating the only two times most guests usually talk with hotel staff on any trip. But the reality is that those short conversations rarely, if ever, enhance any stay. The challenge to the W and others is figuring out other ways to stand out and provide meaningful customer value.

    Again, the parallel to retail is obvious.

    I think W is working on this already. Along with my key they gave me one other eye opener on this recent trip. In my room was a small universal charger featuring cords for Apple, Android, Nokia, LG, Palm and more. I didn’t need the device on this trip, but that’s the kind of useful gadget that would have saved me repeatedly in the past.

    The key question is whether I would select a specific hotel simply because they eliminated a pet peeve (the lines) and provided an essential service (the charger)? Obviously my hotel choices are far more complex than just that - topped by meeting location and price. But maybe W just changed the equation a little.

    And that too is both a lesson and an eye opener for retailers.

    Michael Sansolo can be reached via email at . 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.

    KC's View:

    Published on: April 26, 2016

    by Kevin Coupe

    We're all familiar with companies that bring on interns and then use them for busy work - filing, getting coffee, and all the other grunt work that used to be given to low-level employees the company no longer can afford.

    But at Amazon-owned Zappos, a company that has specialized in breaking with conventional approaches, interns are being treated with a higher level of respect and given higher levels of responsibility.

    For its new 6pm bargain-driven site, Zappos "has tasked students with designing and launching new apps that make the shopping experience more enjoyable for customers," according to a story in Fast Company.

    "To pull it off," the story says, "Zappos had to find the right set of students. Five interns are hired each summer in the mobile division to work on design, branding, and coding. The interview process involves several steps, including a video cover letter that helps leadership find good cultural fits. For coding interns, a tech challenge is also given." Applicants also had two hours to create a quick app. Once the interns were selected, the team was challenged to create the actual 6pm app. Leaders provided the requirements, gave guidance on workflow and business insights, helped set up the project from a project management perspective, and assisted with any roadblocks."

    The article says that "the interns brought a fresh perspective to the project and were motivated to complete it during their eight-week internship," according to Vincent Calderaro, who leads Zappos’s mobile development team. "That brought in a lot of energy," he says. "They were very diligent in the development, and wanted to get it done and have something tangible to show at end of their internship."

    And all five interns who designed the site have been hired post-graduation.

    It's an Eye-Opener.
    KC's View:

    Published on: April 26, 2016

    The Los Angeles Daily News has a piece noting that the high level of supermarket competition in the Southern California market means that any newcomer has "to be firing on all cylinders. They have to have their marketing strategy in place, their pricing has to be good and they need to offer products people will want to buy. In short, they have to get it right."

    And if they get it wrong ... well just as Fresh & Easy and Haggen, each of which came to ignominious ends.

    Aldi's entrance into the market, the story suggests, seems likely to go differently. The German discounter has 18 open in Southern California now, with plans to have a total of 45 open by the end of the year.

    "There are several factors that set Aldi apart from Haggen and Fresh & Easy," the story says. "First off, they already had nearly 1,500 stores in the U.S. before they came to Southern California, so they likely know a thing or two about economies of scale. Secondly, their prices really are low." Plus, "nearly all of their products are private-label brands of their own and the quality seems to be good."
    KC's View:
    It took longer for Fresh & Easy to crash and burn than Haggen, but in both cases, death seemed both inevitable and self-inflicted. It seems unlikely that Aldi will suffer from serious self-inflicted wounds, and so it will be up to all the companies that compete with it to offer compelling, differentiated experiences that provide the products and prices that will keep customers from going to Aldi.

    And the companies that think that Aldi won't have much of an impact, that they can just keep on doing business the way they've always done business ... well, I think they're making a serious mistake. If they get hit hard, they'll have nobody to blame but themselves ... and the wounds, once again, will be self-inflicted.

    Published on: April 26, 2016

    The Wall Street Journal this morning reports that Walmart "is phasing out its Wild Oats organic food brand, according to people familiar with the matter, dropping a line of products introduced two years ago in an effort to bring inexpensive organics to the masses.

    "The world’s largest retailer has unwound a complicated deal with private-equity firm Yucaipa Cos. that allowed it to sell Wild Oats pasta sauces, cereals and other shelf-stable products, the people said. The products will disappear from Wal-Mart shelves in coming months, they added."

    When Walmart made the deal with Yucaipa - which acquired the Wild Oats brand after the banner was sold to Whole Foods - a couple of years ago, the belief was this would jump start its efforts to expand its organics footprint. Now, the Journal writes, "Wal-Mart is switching tactics, hoping to add organic products to shelves in other ways, including selling more fresh produce and adding more organic food to its existing store brand, Great Value, these people said. Wal-Mart would have to further expand its own network of organic-food suppliers."
    KC's View:
    Neither side is talking about what made the deal go south ... or if it just simply ran its course. But the sense seems to be that maybe the Wild Oats brand simply did not fit within the Walmart umbrella, and the Bentonville Behemoth thought it could have more of an impact on its own. Which seems entirely credible to me.

    Published on: April 26, 2016

    Marketing reports that in the UK, Tesco is using an 'If This Then That' approach to retailing, "allowing technically-minded customers to set up automatic grocery orders on"

    According to the story, the technology works "by connecting separate platforms, such as a user’s account with and their Nike+ running app. An action on one account can automatically trigger a reaction on the other.

    "As an example, the service lets customers order burgers from when the weather’s sunny, reward themselves with a beer order if they’ve completed a run, or schedule a weekly order of milk."

    These developments, the story says, are courtesy of Tesco Labs, "the supermarket’s innovation arm. And it suggests Tesco’s thinking about a more open future, where consumers can do their Tesco shopping in many places other than the Tesco website."
    KC's View:
    Tesco's been facing a lot of problems in recent years, and these days it is being run by a guy who isn't a retailer by trade ... and maybe that's the combination necessary to get a company to be open to trying new stuff like this.

    The essential argument is that most shopping is dull and repetitive, and that frictionless, intuitive alternatives simply make a lot of sense. It helps that these alternatives also position Tesco to better compete with Amazon's various initiatives.

    Published on: April 26, 2016

    NBC News reports that Mitsubishi, Japan's sixth-largest automaker, has admitted that it "had used fuel economy testing methods that were not compliant with Japanese regulations for 25 years, much longer than previously known, and would set up an external committee to investigate the matter."

    According to the story, "The automaker's admission that more models may not comply with Japanese standards has sparked fears of ballooning compensation costs and fines. The U.S auto safety regulator is also seeking information, while Japanese authorities have raided one of its research and development facilities."

    It was just a few months ago that Volkswagen admitted that it had been both systemically and systematically cheating on emissions tests for a decade, creating an environment of mistrust enveloping its brands.
    KC's View:
    It simply mazes me - maybe it shouldn't - that the people who run these companies somehow think it is okay to do this crap ... which betrays the public trust and puts their brand at risk. It is morally abhorrent and fiscally irresponsible.

    Published on: April 26, 2016

    • The Seattle Times reports that Amazon "has sued several operators of websites that sell fake reviews of products for posting on the retail giant’s online store ... The lawsuit is part of Amazon’s efforts to protect the value of customer reviews, one of the features that have helped turn the site into the world’s top e-commerce destination."

    According to the story, "Amazon says that only a small minority of reviews are fake. But rooting them out is a task worthy of Sisyphus, the Greek king condemned by the gods to keep pushing a rock up a steep hill, only to see it fall back down again and again."
    KC's View:

    Published on: April 26, 2016

    • The Orlando Business Journal reports that Lucky's Market, which which Kroger recently announced a strategic investment, will open its first Orlando-area store this summer.

    Lucky's currently has Florida stores in Naples, Gainesville and Coral Springs, with plans for Plantation, Neptune Beach, Melbourne and Tallahassee.

    Colorado-based, 17-store Lucky's Market currently operates stores focusing on "natural, organic and locally grown products" in 13 states.

    • The Wall Street Journal reports that "a new study shows that concentrated laundry-detergent packets are more dangerous to young children than other kinds of detergent, and were involved in two deaths and another two dozen life-threatening poisonings in 2013 and 2014. The research, published online Monday in the journal Pediatrics, found U.S. poison control centers received more than 37,000 calls in those two years involving children younger than six who were exposed to laundry and dishwasher detergent packets."

    The story notes that "manufacturers have so far have resisted additional steps such as changing the formulation or appearance of the packets themselves, which critics say too closely resemble candy or toys. Many of the packets are currently still sold in plastic resealable bags that some say resemble food pouches."
    KC's View:

    Published on: April 26, 2016

    I expressed a certain amount of skepticism the other day about a new BJ's Wholesale Club program that allows people to order online and then go inside the club to pay for and pick up their merchandise ... I thought it was a halfway effort that missed the point of modern e-commerce.

    Maria Fruci, manager of external communications for BJ's, offered the following response:

    Thanks for running an announcement about BJ’s new Pick Up & Pay Service. I read your view on the service and would like to share that our Members are expressing positive feedback about our new Pick Up & Pay service. We have learned that Members prefer to pay in-Club since they would like the choice to not pick up everything they may have ordered and also have the option of easily adding other items to their purchase such as fresh produce and deli and dairy items during their Club visit.

    With any new service, we will continue to evolve, research and test ways to improve the shopping experience for our Members. A function that allows Members to pay first online and then pick up in-Club is currently in the works.

    Understood. Point taken.

    Yesterday, MNB took note of a USA Today report that while Amazon has been expanding its same-day delivery service across the country, to a total of 27 metro areas so far, "in some of the largest cities where the service is available, it bypasses ZIP codes that are predominantly black." The story went on to say that "there is no indication that Amazon is trying to exclude African-American neighborhoods, the Bloomberg writers said, and Amazon says it's a matter of pride that it treats every shopper the same."

    A spokesman for the company, Greg Berman, says, “We don’t know what you look like when you come into our store, which is vastly different than physical retail."

    Which is, I suggested, a somewhat hollow defense ... since it would be as easy for Amazon's vaunted algorithms to figure out what the "black neighborhoods" are. The optics are lousy. And I commented:

    The image of an Amazon truck that will quite literally only work one side of the street brings up images of white people who will cross the street out of some misguided sense of caution rather than share the sidewalk with an African-American.

    This story doesn't just look bad for Amazon, but it may even open a window for companies that compete with it to behave in a way that makes a statement about serving everybody, and not just one side of the street.

    The analysis and facts may not be entirely black-and-white. But they look that way.

    MNB user Clay P. Dockery wrote:

    As you pointed out, the system uses “vaunted algorithms” to define where the core consumers exist.  Could it be that the rate of adoption to online shopping has lagged in certain demographics, not because of an exclusionary practice but rather just because?  In the political season when hypersensitivity is at the highest arc, I find the “analysis and summary judgement” to be a sad perpetuation of the challenges we face to be a unified country.

    From another reader:

    I think the USA Today article on Amazon screams ignorance. The only reason this story was published because it’s guaranteed to generate sales with Amazon and Race in the headline. I know it’s hard for the trolls and unintelligent to believe a company would use current sales data for zip codes that provide the most return on this service. To say they are only serving higher income members with same day service might be accurate but hardly a race issue. Even making suggestions like they are not diverse enough to see this “problem” and need more minorities helping make these decisions is ludicrous.  I would feel different if the writer was reporting the company will not deliver to minority neighborhoods. Does this mean I can label Comcast, Dominos, or any company as racist because all of their services are not available in my zip code?  Sure I can but the statement clearly lacks substance.

    Again, to be clear, I emphasized that this may mostly be an optics issue ... but optics matter.

    Regarding Amazon's decision to sell certain products only to Prime members, one MNB user wrote:

    One of the items sold just to Prime customers is small indie flick “Star Wars – The Force Awakens”. If you’re not a Prime member, your only Amazon-involved choice in through a marketplace seller, some of whom are fulfilled by Amazon and may qualify for free super saver shipping.

    An (intended?) side effect of the policy means price-watching website CamelCamelCamel has trouble seeing the Amazon price, and thus can’t auto-alert users (regardless of Prime membership) if the price changes. No idea if other similar services are affected – this is just one I have prior experience using.

    We noted yesterday that "CEO/founder Jeff Bezos has said that he wants Prime "to be such a good value, you'd be irresponsible not to be a member." Prompting one MNB reader to write:

    I find it an interesting irony that Amazon is so focused on membership while Costco seems to be losing their way - against a major component of their business model.

    Five years ago, I wouldn't have thought about cancelling my Executive Membership card.  Costco was an indispensable, last-stop on my shopping trip.  Then, I watched their wine selection become similar to what I could buy at Total Wine. Kirkland Signature luggage, by far best in the industry, now isn't available. The "want" merchandise isn't as compelling as it used to be. Costco services became less compelling to me. It seemed the only reason I could think to go to Costco was for fuel.   When it came time to renew 2 years ago, I chose not to renew my Costco membership.  Instead, I spent the money on Amazon Prime.  Best decision (for me).

    Last Saturday, I took advantage of a Living Social deal that "gave me" a Gold Star membership, or otherwise I wouldn't have even considered Costco.  To be clear, I did enjoy Saturday samples and the $1.75 pizza.... but that isn't enough to get me to buy a full price membership when this first year runs out. I did enjoy seeing their energized employees (again).

    I'm not sure discounted memberships were ever the plan for Costco. I wonder if this tactic is best approach to make up for a lack of innovation / excitement in their merchandise selection.

    Regarding the North Carolina bathroom law, one MNB user wrote:

    Long-time reader, first time caller. In response to reader's comment re: Bathroom laws.

    First, I should point out that the Constitution protects your reader's ability to practice their religion, insofar as that practice does not conflict with the rights of his/her neighbors. It does *not* shield your reader from criticism from those neighbors.

    Secondly, your reader's concept of who is and who isn't male or female illustrates part of why these laws are inhumane (not to mention impractical). "Fully transitioned" is not a bright and shining line. The transition process takes thousands of dollars, and often years of hormonal, psychological, and surgical therapies. Drawing a clear line in that process and saying "men on this side, women on the other" is impossible, especially since which therapies a person decides to undertake, and in what order, and under what span of time is not always at that person's discretion- financial and medical realities come into play. Isn't it more humane (and easier) to just trust each others' self-designation.

    Thirdly, if one's religion requires them to put people into clear boxes of "man" and "woman", that's between them and their faith, I see no reason for the state (or businesses) to conform to that binary. Long ago, the state got out of the business of defining "sin", maybe it's time they got out of the business of defining "manhood."

    I commented yesterday that "the North Carolina law, in my opinion, was a political act, not a moral or religious statement."

    One MNB user responded:

    And you deride companies who chose not to get involved in this “political act”? I expect better from you.

    Sorry I disappointed you. But I guess what you say is true ... since there was virtually no problem that created a need for the North Carolina law, I think that companies ought to decry craven, cynical acts of political gamesmanship that seem targeted at people who might be their customers.

    We had an email yesterday about the law that suggested that the condemnations of the North Carolina law may be anti-religion, saying, in part:

    Doesn't religion hold some sort of a place in society that they should also be tolerated and respected?

    In Boston, the largest and most successful adoption service was that of the Catholic Archdiocese of Boston. Their successful placement rates and outcomes for the children were second to none. Not even close. The city of Boston decided that it wasn't enough to let other adoption services to serve the gay and lesbian community. The Catholic Church needed to do it too. It was just plain bigoted that the Catholic Church didn't allow adoptions to same sex couples. They past an ordinance that forbid the Catholic Church from practicing their deeply help religious beliefs. If you didn't do it, you're out of the adoption services. The Cardinal pleaded with the city council to reconsider because it would force them to close their highly successful adoption services. One of the council members was quoted as responding "that is the goal". How bad is that. Hurt children because we cannot tolerate sexual beliefs that match our own.

    The prompted a response from MNB reader Jeff Gartner:

    Hey Kevin, just to clarify the situation with your reader's comment about Massachusetts and the Boston Catholic Archdiocese's adoption services … the State did not ban the Archdiocese from providing adoption services, it just said it could not receive public funds for its adoption services if it also did not serve gays and lesbians, a civil rights protected class. The Archdiocese could have chosen to continue to provide adoption service, just fund it all privately and not with public money. This has happened in other states as well.

    And it's comparable to parochial schools not being able to receive public education dollars.

    Thanks for the clarification.

    Your last sentence actually hit a nerve. I'm the product of parochial education, and one of my memories of elementary school was being marched up to Albany by the priests and nuns who ran our school and told to tell the legislators that they ought to allow tax dollars to fund private, parochial schools. It was a subject about which I knew virtually nothing - like all of my schoolmates, I was simply a prop.

    I am, in fact, diametrically opposed to the position that I was brought to Albany to lobby for ... and the one thing I can tell you for sure is that at no point did we ever have a discussion in class about the pros and cons of the argument. Even now, almost 50 years later, I resent the position in which they put me, am irritated at myself for not asking the questions that almost certainly would've infuriated my teachers, and even annoyed at my parents for letting it happen.

    I apologize for the digression. But as I said, you hit a nerve.
    KC's View:

    Published on: April 26, 2016

    ESPN reports that "a federal appeals court has ruled that New England Patriots quarterback Tom Brady must serve a four-game Deflategate suspension imposed by the NFL, overturning a lower judge and siding with the league in a battle with the players union ... The decision by a three-judge panel may end the legal debate over the scandal that led to months of football fans arguing over air pressure and the reputation of one of the league's top teams. It is also likely to fuel a fresh round of debate over what role, if any, the quarterback and top NFL star played in using underinflated footballs in the AFC Championship Game in January 2015."

    Unless Brady files another appeal, he will miss the first four games of the 2016 season, against the Arizona Cardinals, Miami Dolphins, Houston Texans and Buffalo Bills.
    KC's View:
    All of which means that New England retailers are going to make a ton over the next few months with "Free Tom Brady" t-shirts.