business news in context, analysis with attitude

Published on: April 27, 2016

by Kate McMahon

I walked past the in-store bakery of a local upscale retailer the other day when it struck me – I might as well have been standing in the frozen food aisle or meat department - or in a drug store. There was not even a whiff of fresh-baked bread or a wafting scent of warm chocolate chip cookies.

By contrast, the next night I arrived at a preview of the new Broadway musical “Waitress” and was immediately enveloped by the unmistakable scent of fresh-baked apple pie. I could even purchase a delectable mini-pie before taking my seat.

For almost 15 years on MNB, we’ve lamented the sterility of many modern supermarkets, which have been so focused on efficiency that they've lacked the sights, smells and tastes of food that would engage the customer and enhance the shopping experience.

Retailers should take a page from the “Waitress” Playbill. The cinnamon-laced pies are baked in a lobby convection oven 20 minutes before the doors to the Brooks Atkinson Theatre open and sets the stage for the show, which is based on the 2007 indie movie Waitress. Before the central character, Jenna, sings the opening words - “Sugar. Butter. Flour” - you know this is about pie.

Jenna is a warm-hearted waitress and signature pie maker at a small town Southern diner who bakes to escape her abusive lout of a husband.
To keep it real, the producers hired New York bakery owner Stacy Donnelly as the official “pie consultant” back in 2014. Stacy worked with the all-female creative team and baked thousands of pies throughout the two-year road to Broadway. She also taught the show’s luminous star, Jessie Mueller, how to expertly roll out pie dough while singing the music and lyrics by pop sensation Sara Bareilles.

Now that the show has officially opened, Stacy bakes some 40 pies a week – 27 custom flavors that sit in cases on the set of Joe’s Pie Diner and five that are served to actors on stage. The former dancer turned Manhattan merchant is also responsible for the 1,200 to 1,600 personal size Mason jar pies sold in the lobby each week.

Trust me, with what Stacy calls the “smell of grandma’s kitchen” permeating the lobby, audience members were lustily scooping up the mini pies. This led me to think about how retailers consistently miss the opportunity to appeal to the consumer’s sense of smell.

Retail studies confirm what stores such as Costco, Stew Leonard’s, Trader Joes, Dorothy Lane Markets and Bristol Farms know through experience – in-store food sampling and demonstrations significantly boost in-store sales.

I think the most successful sampling stations appeal to three of the big five senses – taste, sight and smell. Of course, the smell of baked goods ranging from hearty breads to molten chocolate brownies attracts immediate attention, but the same holds true for just about anything sautéed in garlic and good olive oil or tossed with citrus and fresh mint. Case in point: When I caught the savory scent of ricotta and parmesan cheeses, garlic and tomato last week I had to detour to the Vegetable Lasagna being sampled at Trader Joe's.

Beyond taste and smell, successful sampling informs the consumer about the product’s nutritional benefits, method of preparation and pairing with other foods, and even wine or beer. It’s an ideal way to engage with a customer, and make their shopping experience more personal and meaningful. It creates relationships, as opposed to just selling stuff.

"Waitress" pie consultant Stacy Donnelly told Playbill that the theater audience is very educated and “want to feel a real experience. They want to be a part of it.”

I think today’s consumers want the same experience. Savvy retailers will find a way to make that as easy as pie.


Comments? As always, send them to me at kate@mnb.grocerywebsite.com .

Published on: April 27, 2016

by Kevin Coupe

The New York Times reports this morning that Greek yogurt company Chobani has awarded shares in the company to the 2,000 full-time employees who work for the upstate New York-based company.

According to the story, "Chobani employees received the news on Tuesday morning. Each worker received a white packet; inside was information about how many Chobani shares they were given. The number of shares given to each person is based on tenure, so the longer an employee has been at the company, the bigger the stake."

Hamdi Ulukaya, the Turkish immigrant who founded Chobani in 2005 and built it into a company probably worth several billion dollars, tells the Times, “I’ve built something I never thought would be such a success, but I cannot think of Chobani being built without all these people ... Now they’ll be working to build the company even more and building their future at the same time."

The Times makes several points about the move:

• "The shares given to Chobani employees are coming directly from Mr. Ulukaya. The shares can be sold if the company goes public or is bought by another business, neither of which seems imminent. Employees can hang onto the shares if they leave or retire, or the company will buy them back."

• "The transfer of money by Mr. Ulukaya touches on a hot-button economic issue: the rapidly expanding gap in pay between executives and average workers. The United States has one of the widest pay gaps, and the topic has played a prominent role in this year’s presidential race, particularly among the Democrats."

I think this is great.

One employee tells the Times, “It’s better than a bonus or a raise ... It’s the best thing because you’re getting a piece of this thing you helped build.”

Which is precisely the point.

Too many CEOs are rewarded - handsomely, with little apparent ceiling - in part based on their ability to drive down labor costs. They drive efficiencies, argue against wage increases, lobby against increased minimum wages, and sometimes do so out of the belief that only a company's top managers are entitled to be entitled. They ignore the possibility that front line employees who are paid more, not less, and who have a real, tangible stake in the company for which they work, will help to build the company.

Chobani's decision is an Eye-Opener.

Published on: April 27, 2016

The Wall Street Journal this morning has a story about how c-store chain Sheetz is betting that while full-time employees may cost more, they also will result "in better customer service, lower turnover and a more engaged workforce - all of which, executives say, will lead to higher sales and profits."

The story notes that "nearly 5.7 million workers said they were working part-time last year because they couldn’t get more hours or find full-time work, according to Bureau of Labor Statistics survey data. About 65% of store employees in the retail sector work part-time, according to an analysis by search and consulting firm Korn Ferry Hay Group. Companies reason that keeping staff to 30 hours or fewer a week curbs labor costs and allows firms to act nimbly, adjusting staffing to match customer demand."

The Journal goes on: "Sheetz, and others like beauty retailer Bluemercury Inc., acknowledge that full-timers might cost more at first, but say they are more reliable - 27% of full-time hourly workers leave their jobs per year, versus 68.7% of part-timers, according to the Korn Ferry report. Lower employee turnover saves on training and hiring costs, those employers say, and some report their customers spend more when full-timers take orders and ring up purchases."

Sheetz's experience offers an even more stark comparison, according to the Journal: "Less than a quarter of Sheetz’s full-time staff leaves each year; for part-timers, 83% leave."

Published on: April 27, 2016

Following reports earlier this week that there were racial disparities in the service levels offered by Amazon in certain metropolitan areas - not offering same-day delivery to poor African-American neighborhoods - Amazon said yesterday that "t will bring same-day delivery to the Roxbury neighborhood of Boston," which previously was not being served.

Other than announcing the expanded service parameters, Amazon did not comment on the circumstances surrounding the change.

However, Bloomberg points out that there was immediate and considerable political pressure focused on the e-tailer once its analysis of Amazon's service areas became public, finding "varying degrees of racial disparity in the service boundaries in Atlanta, Boston, Chicago, Dallas, New York and Washington."

Published on: April 27, 2016

At the same time as troubled fast food chain Chipotle announced that Q1 same-store sales were down almost a third, a financial result that seems directly related to the series of food safety issues tat afflicted it last year, the company said it may introduce a "temporary rewards program" designed "to bring skeptical customers back to the fast-casual burrito chain."

The story notes that Chipotle has seen the largest declines among its best customers - the people who used to visit its stores at least 25 time a year. Saying that it needs to drive up sales to those customers, getting them back into the habit of eating at Chipotle, the company says it is considering some sort of incentive program that would at least start out as temporary.

Eater reports that Chipotle also plans to introduce chorizo to its menu, with CEO Steve Ells describing it as "a blend of chicken and pork spicy sausage, cooked on our plancha" with lots of "crispy bits, nice spice, and really good texture."

However, Eater also notes that "Ells did not comment on the fact that, traditionally, chorizo is made from pork only."

Published on: April 27, 2016

The Guardian has a story about how British sandwich chain Pret a Manger has survived an initially shaky expansion into the US to become a steadily growing company, with 65 stores in the US - its second largest market - and 10 more scheduled to be opened in 2016.

While the company also has emphasized its "ethical policies," such as hiring homeless people and donating leftover food to shelters, CEO Clive Schlee tells the Guardian that "Pret’s key strategy of making food fresh in kitchens behind each coffee shop ... is the key strength of the business. Supermarkets and the vast majority of other sandwich chains make their food in factories and deliver them to stores."

Pret’s system, he says, "offers better flexibility to adapt to new food trends – such as veggie food and avocados – and sudden fluctuations in demand caused by the weather or disruption at transport hubs that can mean surges or slumps in customer numbers."

Published on: April 27, 2016

Ace Hardware Corporation said yesterday that it is will enable retail grocery stores with which it is connected to deliver Ace discounts to supermarket shoppers.

According to the announcement, "Retail grocery has become an important channel for Ace Hardware, the world’s largest retailer-owned hardware cooperative. Ace Hardware operates both 'store-within-a-store' configurations and adjacent storefronts with participating retail grocers to provide one-stop shopping for consumers." The goal is to integrate the grocery and hardware store systems in a way that generates loyalty for both.

The technology component is provided by ProLogic Retail Services.

Full disclosure: ProLogic Retail Services is a longtime MNB sponsor.

Published on: April 27, 2016

• The New York Times reports that Dannon, "looking to tap into the public’s growing concern about the source of its food, is establishing a direct pipeline to some farms that supply the company with milk, part of an ambitious plan to influence farm practices right down to the dirt ... farmers in the program must adhere to Dannon-dictated animal welfare standards and work to improve and conserve soil on their farms, among other things."

Mariano Lozano, Dannon's CEO, tells the Times that "engaging in this direct way with our milk suppliers allows us to join them in a journey to improve agricultural practices and reduce their footprint on the environment, which in turn reduces Dannon’s footprint on the environment." And, he added, "For the last many decades, we’ve had a system that encourages short-term efficiencies at the expense of soil health, animal welfare and biodiversity. We want to play a part in changing that system."


• Forbes has a piece about 550 Target stores are "piloting its in-store wellness sections, called Connected Health. An evident offspring of its recent pharmacy partnership with CVS Health, these sections will include connected medical devices, such as blood pressure monitors, that can track and record participating shoppers’ wellness information via smartphone ... Such centers may help Target track other shopper needs as well. With these dedicated Connected Health centers, Target is treading beyond offering wellness as a service, which many other retailers already do. Instead, Target is reformulating health care by making it a consumable retail product, by way of smartphone."

The sections are positioned adjacent to the CVS pharmacies inside the Target stores, which are the result of Target's decision last year to sell all of its 1,700 pharmacies to CVS, which it felt was better positioned to run them and turn them into entities that would attract shoppers.


• USA Today reports on how "after spending years trying to convince consumers to buy more of their famous-name products ... some of the biggest players in the food industry are trying to get people to eat less of them." Whether it is junior-sized versions of the Big Mac, thin Oreos, or miniature soda cans, "downsizing has become yet another tactic major companies are using to hedge against increasing pressure to cut calories and boost healthiness in processed foods."

Published on: April 27, 2016

• RadioShack announced that it has hired Dene Rogers, former CEO of Target Australia and CEO of Sears Canada, to be its new president, and will "focus on positioning RadioShack's unique omni-channel platform for long-term growth."

Published on: April 27, 2016

Some different responses to Michael Sansolo's column yesterday about how the W hotel chain now is allowing patrons at some properties to use applications on their smart phones to avoid the front desk and both check in and unlock their rooms.

MNB user Andrew D. Couch wrote:

Hilton Hotels is also employing keyless room access and check-in via phone app. I use this a few months ago at a Hilton in Charlotte, North Carolina and it was wonderful.  I went straight from the parking garage to my room and just placed my phone in front of the reader on my hotel room door to enter.  So for the entire stay I did not need to stop at a desk at all to check in, check out or do anything else. My receipt came via email.  A real timesaver.

MNB user Jason Brasher wrote:

I travel frequently, as many in this industry do, and have often thought, “if only my Marriott app could be my key as well as check me in and out”.
 
It can’t come soon enough in my opinion. I do hope that the hotel chains will maintain staff that are engaging in the spaces where I often find them both helpful and value added to the stay. This is generally a concierge lounge, lobby, eating establishment/area. Even if I don’t need a key, a short conversation with a local can be great even though an app or Google can help me find a place to eat or something to do in the area.
 
It may not be everyone’s opinion, I may not even use it every trip, but the personal interactions are appreciated and whether it’s the hotel or the store, there really isn’t an app for that, at least not if it is done well.

But another MNB user disagreed:

How sad. One more tool to eliminate jobs, contribute to the de-socialization of America and eliminate personal contact, which in many ways is how service industries differentiate themselves. Many of us have been there and my experience is “when arriving late” there typically is not a single person in line and a friendly face (friendly is part of their job description) is a pleasant diversion from the travel hassles…Yes, I know that 2 minutes is going to change the course of the evening, but heck if you can get away without talking to a human and eliminate a job all the better…And yes, the 1 minute in the morning when you simply drop-off your “key” is a game changer. Let’s look for self-making beds too, or a discount if you make your own bed. Housekeepers don’t need jobs either.

Actually, that's already happening. At some hotels, one can get extra loyalty points if you say housekeeping doesn't have to come in.

I can appreciate your feeling that technological innovations like these - just like e-commerce - can be job killers. But you can't stop progress ... and it will be up to companies to figure out how to marry technological innovations to new kinds of service that will satisfy customers in a relevant and compelling fashion.