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    Published on: August 5, 2016

    by Kevin Coupe

    There's been no further word as of this posting about the possibility that Walmart could spend $3 billion to acquire Jet, the online discount retailer, in an effort to be more competitive with Amazon. There have been a multitude of reports that the two companies are in negotiations, and my instinct is that this sounds like a deal that is likely to happen .... by which I mean that it doesn't sound like an idea for a deal floated by some analyst looking to get his name in the Wall Street Journal. (Though, it also could be that Walmart might just make an investment in Jet and not buy the whole thing. We'll see.)

    I did think that this analysis by Fortune seems right on target and passing along:

    "It’s not clear that Jet would be able to solve Walmart’s competitive problem, however. Jet has shown no evidence it can compete with Amazon except by dramatically underpricing the online giant, using strategies that will require massive amounts of funding and therefore hold little promise of ever being profitable.

    "For Jet, a Walmart acquisition would be a huge win, since it would save the company from ever having to prove it has a realistic chance of success. But it’s not at all obvious that it would be a win for Walmart."

    I agree. Totally.

    I also think it is interesting that a number of analyses are suggesting that rather than give Walmart the ability to catch up with Amazon, a Jet acquisition actually would make it more likely that it would be able to match Target's e-commerce progress. Which, to be honest, never occurred to me.

    Until now.

    Lots of activity in this space. All of it Eye-Opening.
    KC's View:

    Published on: August 5, 2016

    Bloomberg reports that after a roughly four-year hiatus, Target has decided to once again sell Amazon-branded technology products, with Amazon’s Kindle e-readers, Fire tablets and Fire TV devices now available on Target's e-commerce site, and slated to be available for the holidays in the retailer's 1,800 stores.

    The story notes that since 2012, when Target decided to stop selling Amazon-branded products, a lot has changed for the company: "Target has a new chief executive officer, Brian Cornell, who has refocused the company on its kids, beauty, fashion and baby sections while also introducing new exclusive brands. The retailer’s sales have stabilized and it has revamped its online strategy, expanding its selection and getting more competitive on price. Based on customers’ feedback, the company expects Amazon’s devices to drive traffic to its stores and thinks they could give its lackluster electronics business a boost."

    As for Amazon, "which has been experimenting with its own brick-and-mortar stores, the deal with Target gives it 1,800 new showrooms for its products. Amazon has been at a disadvantage to Apple Inc., which has a fleet of sleek stores where customers can touch, feel and try out the latest devices. Amazon, which failed in its attempt to roll out a line of smartphones, sees its tablets as a key way to drive sales of its e-books."
    KC's View:
    I'm sorry, but I think this is a dumb move by Target, which - to mix my metaphors - is putting a target on its own back by allowing a Trojan Horse into its stores.

    I'm sure that the folks there think that this will drive traffic to its electronics departments. They're probably right. And then, if they buy an Echo or Kindle or some other Amazon product, it becomes more likely that these same shoppers will use the devices to buy products from Amazon - including stuff that Target sells.

    Let's be clear. Pretty much every device that Amazon makes is designed to generate some other sale. That's the whole strategy and mindset. And for Target to do this is to put short-term traffic and sales way above the issue of long-term sustainability.

    Now ... at the same time as the Amazon deal was made public, it also was reported by Mashable that Target has reached a deal with Harry's - the online shaving/subscription service - to install Harry's sections in its stores.

    The story says that "the brand will take 4-feet of retail space with its own section, packaging and test razors on display. The signage includes a 4-foot tall razor along with products ranging from Harry's razors, face wash, after shave and shaving cream, among others."

    I have less of a problem with this because Harry's probably doesn't have "eviscerate Target" on its list of goals. Though I'd think that Procter & Gamble/Gillette would have a problem, since here we have Target aiding and abetting an online company that exists to disrupt their business.

    Published on: August 5, 2016

    The Guardian has an interview with Tim Mason, the former Tesco executive who was sent to the western to run its Fresh & Easy Neighborhood Markets division - which was such a debacle that in 2013, after having lost more than $2 billion, it filed for bankruptcy and persuaded billionaire/supermarket speculator Ron Burkle to take it off Tesco's hands.

    “It was a great business,” Mason says. “There were many very good reasons, not least the economy, that meant it was somewhere between very difficult and impossible to be successful in the timeframe ... If Tesco had been financially stronger, the business could have taken everything it learned over six years and refined and developed the model and got it to an acceptable place. Unfortunately there wasn’t that economic firepower. There were problems all over the place, not least in the UK, and the decision was made.”
    KC's View:
    I'm willing to accept the premise that Tesco's problems at home - where growing competition from discounters was pressuring profits and margins - perhaps meant that it could not sink any more money into Fresh & Easy ... but give me a break.

    Many of the Fresh & Easy stores I was in were ill-conceived, in questionable locations, and with very little sense of the local market. I've never met Tim Mason, but I understand that from people who know him that he is a smart, nice guy.
    And I feel bad for him. Mason worked at Tesco for three decades, and it all came crashing down on him.

    That said ... I can vividly remember Ian Lord Maclaurin - who preceded Terry Leahy as CEO, telling me 25 years ago that opening stores in the US would be an utter disaster for Tesco, and would never happen. (I think he never changed his mind on that, despite what his successors did.)

    For Mason to suggest that Fresh & Easy's failure was just because Tesco had to tighten the purse strings strikes me as revisionist history at best, and utter denial at worst.

    Published on: August 5, 2016

    The Los Angeles Times reports that the United Food and Commercial Workers (UFCW) union has reached a tentative labor agreement with Ralphs and Albertsons in Southern California, a deal that should avert "the immediate threat of a strike that could have roiled some of the region's largest supermarket chains."

    Local union members represented by the UFCW are scheduled to vote on the package on Monday. To this point, details have not be disclosed.

    According to the story, "The specter of the last major grocery strike, which started in 2003 and lasted 141 days, loomed over this year’s negotiations. That strike dealt heavy losses to both sides." But, "in June, about 47,000 clerks, meat cutters, stockers and other grocery workers across Southern California voted to authorize a strike against Ralphs and Albertsons, which includes Vons, Pavilions and Safeway stores, if a deal wasn’t reached by Aug. 8.
    KC's View:
    Good. The last strike gave me story material for months, but I took no pleasure in it. (Well, maybe a little pleasure, just because it was a good story. But I felt a little guilty about it.)

    Published on: August 5, 2016

    Bloomberg reports that when Josh Tetrick, the food scientist/entrepreneur who created Hampton Creek, was raising $90 million from investors by telling them about his vegan-oriented ideas and proven demand for his products, he neglected to tell them "that the startup undertook a large-scale operation to buy back its own mayo, which made the product appear more popular than it really was.

    "At least eight months before the funding round closed, Hampton Creek executives quietly launched a campaign to purchase mass quantities of Just Mayo from stores, according to five former workers and more than 250 receipts, expense reports, cash advances and e-mails reviewed by Bloomberg. In addition to buying up hundreds of jars of the product across the U.S., contractors were told to call store managers pretending they were customers and ask about Just Mayo. Strong demand for a product typically prompts retailers to order more and stock it in additional stores."

    Tetrick tells Bloomberg that "the primary purpose of the purchases was to check the quality of the mayonnaise." And, "Five former Hampton Creek contractors and two ex-senior staff members say the buyback assignments were separate from quality checks at stores. The ex-contractors say in most cases they were told to simply buy up jars at nearby stores and were free to consume or discard them—not look for quality issues, as the company says."
    KC's View:
    I don't know about you, but I find the whole "quality control" explanation to be a little lacking in credibility...

    Published on: August 5, 2016

    Recode reports that Amazon plans to add 18 new warehouse facilities to its network during the coming quarter as it tries to avoid the problems of last year's holiday season, when it "was overwhelmed by merchants that wanted Amazon to store and ship products on their behalf, so Amazon had to rely on last-minute solutions that were more expensive.

    "Amazon says it’s not going to happen again."

    CNet reports that Amazon has "added a handful more brands to its Amazon Dash Replenishment program, which involves technology that can teach gadgets to reorder their own supplies directly from Amazon. Devices from AESOP-Works, Behmor, JP Certified, Neato Robotics, Perfect Company, Petcube, simplehuman and SmartThings are now compatible with the Dash Replenishment technology. Also, GE Appliances will expand its number of Dash-supported products."
    KC's View:
    So let me get this straight.

    Walmart seems to be negotiating to buy Jet - an as yet unproven e-commerce business - for $3 billion so it can try to catch up with Amazon.

    At the same time, Amazon is opening 18 new warehouses to keep up with expected demand. And expanding its replenishment ecosystem.

    Got it. I think I know where I'd be placing my bets on this one.

    Published on: August 5, 2016

    • The Associated Press reports that Walmart "has launched a new scheduling system in about 650 Neighborhood Market stores that gives hourly workers more certainty about their schedules." The system could eventually be rolled out to all of Walmart's US stores, the company says.

    According to the AP story, "There are about 62,000 hourly workers at the neighborhood stores where the new system is being deployed who now have two scheduling options. Those choosing fixed shifts are guaranteed the same weekly hours for up to six months. The remainder will stick to the current system of having three weeks advance notice and being able to choose their hours based on what’s available."

    The retailer says that "the new software program will better predict staffing needs during peak hours, as well as and where and when to best deploy workers," while also being "more transparent when offering employees hours."
    KC's View:

    Published on: August 5, 2016

    ...with brief, occasional, italicized and sometimes gratuitous commentary…

    • The Tampa Bay Times reports that in Florida - as elsewhere - "for the last several years, consumers have increasingly reached for local or regionally produced items. Grocery stores have taken steps to highlight those products, and the small businesses behind them say it has made a big difference."

    In some cases, the story says, products at Publix and Winn-Dixie that used to bear private labels are being shifted to an external brand that can be more easily and credibly established as local, which they have found really drives sales, especially among millennials.

    This story also picks up on the fact that millennials tend to define "healthy" different than Baby Boomers. We always thought of "healthy" as meaning low fat, low sugar, "diet," and that sort of thing, while millennials define it as local, fresh, and sustainable. That's a big shift...

    • The Wall Street Journal reports that Dollar Tree, which "grew to more than 14,000 stores with last year’s $9 billion purchase of Family Dollar, will cut 370 jobs, including 100 vacant positions, as part of its integration efforts. The cuts ... are part of a move toward shared services for back-office functions."
    KC's View:

    Published on: August 5, 2016

    Responding to our story about Target developing a "connected nursery" concept that allows parents to use internet-enabled technology to more closely monitor their kids, MNB reader Tom O'Brien wrote:

    Having an 18 month old at home gives me some expertise to comment on the article regarding Target’s initiative to create connected nurseries.  I recommend anyone thinking of using any internet based baby products to google “baby monitor hack”.  Having a brother in law in the IT business we asked him why he didn’t use an internet based baby monitor as connecting it to your phone seems like a really great idea.  He gave me his thoughts and after researching it I found there are some truly twisted people in this world.

    A much more simple recommendation I could make for Target would be keep items that are actually selling in stock.  Quite frustrating to make a trip to Target and a quarter of the items on your list are out of stock, especially baby products.  I can do without something for a day, my kid can’t go without diapers.  My wife became so fed up she refuses to shop at Target for anything.  Sometimes retailers can’t see the forest through the trees.  Having great laid plans is terrific, but if I can’t find an item there are plenty of other places where I can.

    Regarding the much-speculated-about Walmart acquisition of Jet, MNB reader Duane Kolsrud wrote:

    Your comment on Walmart not taking advantage of their brick & mortar locations is spot on.  They have instant distribution and can offer pickup or delivery (and very quick turnaround at that).

    Grocers do it- why can't they figure it out? I would think they have more margin to work with than to grocers.


    Regarding the announcement that Academy Sports + Outdoors, the sports, outdoor and lifestyle retailer, has hired Michelle J. Gloeckler, most recently EVP, Consumables, Health & Wellness at Walmart in the US, to be its new Executive Vice President, Chief Merchandising Officer and President, MNB reader Jill Riemenschneider wrote:

    Michelle Gloeckler is one of the most talented person I’ve met.  She’s passionate, vivacious, and incredibly smart.  Academy Sports is lucky to have her!

    Which means, I would assume, that Walmart is unlucky to have lost her.

    Thoughts from an MNB reader about the efficacy of cockroach milk:

    I'm among the few in the MNB community that actually knows what it takes to milk a cow by hand.  That was part of my farm chore list (twice / day) growing up, each session going 15 minutes / cow.   I can't fathom what it would take to "milk" the cockroach. Nor, how many would have to be milked to yield a gallon.

    That said: No marketing campaign and branding, no matter how ingenious, would tempt me to try cockroach milk- or any product containing it despite reported health advantages.

    I'm with you.
    KC's View:

    Published on: August 5, 2016

    by Kevin Coupe

    Matt Damon is back for the fourth time as amnesiac spy/assassin Jason Bourne in the film of the same name, and while the Paul Greengrass-directed movie is kinetic as all get out, it has a stripped-down, minimalist approach (or least as minimalist as a film can be with a Las Vegas car chase that destroys almost 200 cars) that I find left me out in the cold a bit.

    In The Bourne Identity, The Bourne Supremacy and The Bourne Ultimatum, we were told the story of an assassin who was struggling with his conscience even as he tried to regain his memories. The films were terrific as Bourne shifted from being hunted to hunter, and the locales all over the world provided a fascinating backdrop to all the skullduggery and action; the highly insular and self-protecting world of the CIA was an intriguing counterpoint, as they tried to stop Bourne from discovering who he was and how he got that way.

    In Jason Bourne, the eponymous character has pretty much figured out who he is, but he's propelled back into the game when a hack into the CIA mainframe reveals previously unknown information about his background. For my money, however, some of this was pretty weak - he already knows that the CIA has lied to him left and right, so another lie didn't seem all that shocking.

    Damon looks great in the role, and he plays it with taciturn intensity ... he only has 40 or so lines, and he is all strong and silent, letting Tommy Lee Jones (whose facial crags seem to have crags) and Alicia Vikander carry most of the load in terms of dialogue and exposition. But for me, the real problem was that there wasn't breathing room between the action scenes - that's where one gets to care about the characters, or get more insight into them. And that's lacking here - it is like, because we've already spent three films getting to know this guy, Greengrass has decided to make it all about pumping the gas, with little use of the brakes. In doing so, I think they missed an opportunity to do something different and interesting. (My son David, who is a writer, thought they should have made Bourne's aging a subtext of the film - what happens when maybe he can't be Jason Bourne anymore? That was what they did with James Bond in Skyfall, of course, but they could've approached it entirely differently.)

    Anyway ... I liked Jason Bourne even if I found it a little lacking. It was moderately diverting without reaching beyond its well-established formula.

    My wines of the week - the 2015 Maryhill Albarino, an excellent and refreshing US version of the Spanish wine that is one of our favorites. And, it comes from the Pacific Northwest, so it has to be great.

    And, there's the 2-14 Ayres Pinot Noir from Oregon's Willamette Valley, which also is delicious.
    KC's View:

    Published on: August 5, 2016

    Alas, all good things must end...

    Last week ended my 2016 summer "adjunctivity" at Portland State University in Oregon, save for the grading of some final exams. (I keep telling myself that while leaving hurts too much to laugh, I'm much too big to cry.)

    Once again, it was been a terrific summer, and as always, I appreciate Tom Gillpatrick's faith in me and willingness to indulge my desire to spend time in the classroom teaching and learning from some really smart people.

    I've said it before and I'll say it again - these weeks in Portland are consistently among the happiest of my professional life, and I love the hours I've spent in the classroom. (I'm also pretty happy about the hours I spend outside the classroom, enjoying the city and the state and hanging out with new and old friends and enjoying all they have to offer. As Jimmy Buffett sings, "I have found me a home" ... or will have, once Mrs. Content Guy decides to retire.)

    As you read this, I am driving back east. The Mustang is packed up, the top is down, the music is on, and I'm on the road. (I like to think of this as my Paul Sheldon trip, except hopefully with a better ending. Extra credit to anyone who gets the reference.)

    Hence, the reason for this note...

    I've decided to take a few days off this week, mostly because I'll be driving 8-10 hours a day by myself, and I'm a little concerned that if I also try to spend hours cranking out MNB in hotel rooms, I'll be so tired that I could fall asleep at the wheel. I figure that wouldn't really be in anybody's best interests.

    You'll know I'm back because a new MNB will be posted, and you'll get an MNB Wake Up Call from me in your email.

    Thanks for your patience ... and I'll see you soon.


    KC's View: