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    Published on: October 21, 2016

    by Kevin Coupe

    We talk frequently here on MNB about the impact that Amazon is having - and is likely to have - on more traditional retail. Another reminder came yesterday, when Hank Armour, president/CEO of the National Association of Convenience Stores (NACS), gave his annual address at the NACS Show in Atlanta.

    One of Armour's primary topics was the concept that he called “working backward,” which he said was making sure that "the defined benefits to the end user are defined before any project can be initiated."

    The first step in this process he said, is to write a press release announcing what success looks like.

    Which is exactly what they do at Amazon, and have pretty much from the company's beginnings. We've mentioned it often here on MNB.

    Armour is absolutely right, because working backwards and defining customer benefits helps businesses do two things.

    First, it simply defines the customer benefit. If you can't define the benefit to the shopper, then it is time to rethink the initiative. It isn't a concept that started with Amazon, but it is one that Amazon has brought to new technological heights, using algorithms to figure out what customers wanted and needed, and then responding.

    Second, it forces the business to think in terms of story. We've written about this a lot on MNB over the years - the advantages of having a clear narrative that defines the business for customers, employees and partners. If there's a story, then there is a touchstone for everyone connected to the business.

    This is, I think, very smart. If the businesses attending Armour's NACS Show speech take it seriously, it gives them an advantage going forward.

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

    Published on: October 21, 2016

    The Triangle Business Journal reports that The Fresh Market next week will begin the rollout of a new logo and lower prices that "are part of a larger 'reinvention' of its stores" that it hopes will be chain-wide by 2018.

    “This is a significant milestone in The Fresh Market’s brand evolution,” said Rick Anicetti, president/CEO of The Fresh Market, in a prepared statement. “The reinvention of our stores will place an emphasis on delicious fresh fare, convenience, and health and wellness options. The company is investing in what our customers love most about The Fresh Market, while adding new categories requested by our shoppers.”

    The Business Journal story says that "in addition to lower prices, the grocer will also be adding more items to its offerings so that shoppers can get what they need without going to other supermarkets, as well as more stations offering samples of various products. The stores also will feature a new Mind & Body department, which will be stocked with expanded selections of 3,300 vitamins, minerals and supplements, and more assistants available to answer customer questions and offer recommendations."

    KC's View: In the past, I've always found The Fresh Market to be a format with limited appeal. Nice stores, but not all that compelling and rarely giving me a reason to pass other stores to go there.

    I'm going to be very interested to see how the new Fresh Market develops under Rick Anicetti's stewardship. He's going to give it a specific image, and give people like me a reason to check it out more often, I suspect.

    Be fun to watch.

    KC's View:

    Published on: October 21, 2016

    Fast Company has a story about a new study from research firm 1010data, which "analyzed consumer-spending data that represents millions of consumers, revealing a significant retention problem for the major meal-kit delivery services - which ship recipes with pre-portioned ingredients to customers on a weekly basis. After the second week, only about 50% of customers stick with Blue Apron, 1010data found. Six months into their subscriptions, only about 10% remain. The firm found a similar pattern for HelloFresh and Plated."

    All the meal kit companies say that the study data is inaccurate and does not reflect their experience.

    Fast Company writes that "if a large number of people drop their subscriptions, it is a problem for meal-kit companies because they often spend a lot of money to encourage customers to sign up. Blue Apron, for instance, offers a $30 discount to first-time customers, the equivalent of about three meals. HelloFresh offers a $15 discount to new customers. Plated offers two free meals with the first order. If customers don't stick with their subscriptions for long, these companies don’t recoup that marketing spend."

    However, the story says, "Despite the retention problem, 1010data found that the meal-kit industry has grown over 500% since 2014. A food-consulting firm estimated that category will account for $3 billion to $5 billion of the online food shopping business in 10 years."
    KC's View:
    If the numbers are right, I suspect the meal kit companies are trying to figure out how to address the problem. If they find out that it is only promotions that are driving traffic, it is going to compound the problem ... and their ability to be profitable if they have to keep offering discounts.

    I still think this is a business with potential and possibilities. But like most things, it isn't a panacea, and it won't be easy. Be foolish to think it could be.

    Published on: October 21, 2016

    The Detroit Free Press reports this morning that "the prepared foods section at Whole Foods' Detroit store on Mack Avenue" has been "linked to two recent cases of Hepatitis A."

    The Detroit Health Department has requested that anyone who has eaten prepared foods purchased at the store during the October 6-12 time frame speak to a doctor "and seek preventative treatment."

    One of the identified cases was a store employee in the store's prepared foods department, and the other was a customer.

    "While it remains unclear exactly how either of these individuals contracted Hepatitis A, and we know that Whole Foods Market Detroit has a comprehensive food safety protocol, we want to do our best to protect our residents and those of surrounding communities who may have been exposed," said Dr. Abdul El-Sayed, executive director of the Detroit health department.
    KC's View:

    Published on: October 21, 2016

    GeekWire reports that "Amazon founder Jeff Bezos says he’s trying to do for outer-space ventures what delivery services and the internet did for him: provide the 'heavy lifting infrastructure' that will make it possible for entrepreneurs to thrive. And he’s willing to commit billions of dollars of his 'Amazon winnings' to make it so."

    The story offers some perspectives provided by Bezos at this week’s Vanity Fair New Establishment Summit in San Francisco, and it is fascinating. You can read the entire story here.
    KC's View:
    Everything that Jeff Bezos is doing at Amazon - especially when you consider the Echo/Alexa system - results from his love of all things Star Trek. After all, he loves a show in which Capt. Jean-Luc Picard can turn to a computer console and say, "Earl Grey, hot," and have it appear.

    No wonder he's seeding initiatives that, if we don't screw it up, could turn into the United Federation of Planets.

    Published on: October 21, 2016

    • Brand Keys is out with its annual list of Loyalty Leaders - companies that work to create persistent and sustainable consumer engagement. After looking at 635 brands in 72 categories, it concluded that Amazon was number one, followed by Zappos, Ralph Lauren, Sephora, Trader Joe’s, Sam’s Club, Old Navy, Victoria’s Secret, eBay, and Whole Foods."

    Ever-increasing consumer expectations, Brand Keys says, force "brands to work a lot harder to create emotional engagement – the ability for a brand to be seen as meeting consumers’ expectations for their Ideal Retailer. Today emotional engagement is the predictive, real-world yardstick for loyalty, market share, and profitability.

    "Want to know what consumers are going to do and where they’re gong to shop? Measure real loyalty and engagement."
    KC's View:

    Published on: October 21, 2016

    • Associated Wholesale Grocers (AWG) said yesterday that effective January 1, 2017, David Gates - the company's vp of Sales and Merchandising for the Southaven Division in Memphis, Tennessee - will become SVP and Division Manager of the Kansas City division. He succeeds Bob Pickerill, who is retiring.
    KC's View:

    Published on: October 21, 2016

    Responding to our story about Apple suing Mobile Star, a New Jersey company it says is the source of counterfeit Apple products being sold on Amazon, MNB reader Bob Thomas wrote:

    I was at the Canton Fair in China last week.  I saw fake products in booths.  I saw iheat hair dryers and iclip hair trimmers in the booth of a major Chinese company that should know better.  Intellectual Property is one of the few crimes where the victim has to pay for the cost of prosecution.  It is not just a fake watch or purse.  It is the fake airplane part that fell off a plane on the runway which caused the crash of the Concorde.

    The FAA estimated that counterfeit or "suspected unapproved parts" contributed to 174 U.S. aircraft crashes and other accidents between 1973 and 1996, causing 17 deaths and 39 injuries. The FAA also estimates that 2% of the 26 million aircraft parts installed each year (520,000 parts) are counterfeit.  The entire counterfeit market is estimated at 350 billion dollars a year.  It is frequently used as financing for terrorists and organized crime.  I hope Apple gets a huge settlement and drives that company and its owners out of business forever.

    Chiming in on the Tesco-Unilever dispute over pricing, one MNB user wrote:

    As someone who has to manage the current situation in the UK and Europe, it is the suddenness of the15% devaluation of the British Pound that creates the issue.  UK manufacturers have to buy many of  their major raw materials and ingredients in Euros, distributors of European brands that are popular in the UK have to buy them in Euro’s so the 15 % deflation of the British Pounds against the Euro overnight is quite a disrupting force.   You can hedge the currency which helps for a while but the hedge will run out, and then the currency difference will hit you right between the eyes if you don’t do something.

    Tesco requires 90 day notice on price increases, and it is not reasonable for Tesco or any other retailer to think that manufacturers have 15% profit to give up without a fight.  But this is just an extension of the battle for the consumer,  manufacturers for years have owned the relationship between their brand and the consumer. Today, retailers are working to own the relationship with their consumers by creating their brand (overall brand of the store, not just private label branding) and relegate the manufacturer brand to the sidelines.  The retailer does not want the consumer to think they raised the price 15% overnight but they want to tout that they fought the big manufacturers to bring their customers lower pricing to help inflate their company brand promise.

    I got a lot of email about yesterday's FaceTime commentary drawing business lessons from a 10 percent loss of ratings for the National Football League so far this season. Among them...

    One MNB user wrote:

    This is an insightful and interesting take on business and the NFL.

    Personally, between you and me, I have not only lost faith in the NFL because of the NFL’s slowness in acknowledging the consequences for the men who play but also because of the continued reports of domestic abuse and wantonness from the players. Violence on the field is one thing, but violence off the field is another altogether. I simply cannot abide by any man who thinks it’s okay to put his hands on a woman in an aggressive way and I cannot abide by a league that rewards those men simply because they can run the ball or tackle a QB. It started with Ray Rice for me and ended with Jerry Jones hiring Greg Hardy to play on the Cowboys. I have not watched a game in a few years now, have no plan on doing so anytime soon, and I don’t think I’m the only one.

    True. It will be hard to watch the NY Giants game this weekend without thinking about kicker John Brown, who won't be playing because of spousal abuse issues.

    MNB reader Bryant Bradanini wrote:

    I love your perspectives, but would add one.    Broadcasters are ruining the experience.  Commentator opinions, attempts to be either funny or controversial, and contrived theories pull attention away from the real show.

    MNB reader Mike Owart wrote:

    From a pure football fan perspective, the ratings are down because of:

    the increased number of commercials per game (viewer time impact);

    the defensive rules changes that results in a pass interference call on every other pass play (tough being a DB these days);

    the time it takes for a booth review on TDs and turnovers (also viewer time impact);

    the rules change on kickoffs (rarely a kickoff return…for safety reasons…but less viewer interest);

    too much media/personnel diluting the product (way too much daily NFL talk or how many pre-game talking heads can sit on stage? I think we are up to 6 now).

    MNB reader Deron Braun wrote:

    After listening to your message this morning and reflecting back to what I had read just the other day about this very trend I believe it’s not just one thing that has caused the ratings to drop the first 5 weeks of the season.  If I were the NFL I would first look to see how the TV ratings are for the college game and if they are down as well then it could very well be a systemic issue concerning the game itself which then could lead some credence to the concussion issue that you brought up.   It could also be just a number of other parts of the puzzle such as weather (good or bad), team match ups, the fact that it feels as if every network has games at now odd time slots, or maybe the quality of the game has just gone down (to many penalties being called slowing the game down).  Or just maybe the NFL has reached a tipping point where people would rather spend time doing something else than watching a sport that they deem not worth their time anymore.    Time will tell but if I were the NFL I surely wouldn’t dismiss this even if viewership does come back as the cold weather sets in, this could be a warning shot that the NFL isn’t the golden goose after all but possibly just a goose.

    MNB reader Jackie Lembke wrote:

    I also wonder if there are some other factors at play. My husband and I watch football, but not consistently, okay we don’t really watch as much as monitor the games. We have some teams we enjoy watching and some individual players we enjoy watching, but honestly I am getting tired of hearing about million dollar salaries to people who just don’t seem like they are worth a million dollars, so I don’t watch them play unless they are playing against one of my favorite teams or players. I enjoy watching college football and will watch a game from beginning to end and I can afford to attend a game in person (our favorite college team is in the NAIA so games are less than $10, very affordable and a lot of fun).

    MNB reader Jeff Reinartz wrote:

    Great business analogy Kevin. I have to point out that, for me, I've just
    gotten really tired of watching a defensive end, whose team is down 35-7,
    acting as if he just won the Super Bowl after making a sack! Too much I in
    team for me.

    And finally, from MNB reader John Ruocco:

    Shocked to see you bring up how ratings are down for the NFL and not even mention taking a knee during the National Anthem. Clearly many have said they have stopped supporting the NFL.

    I think it is a fair point that some folks may have stopped watching the NFL because of the protests. I didn't mention it because, to be honest, it never occurred to me.

    The protests never bothered me. It always kind of bothers me more when folks who normally embrace the notion of freedom of speech have a problem when folks with whom they disagree actually practice it.
    KC's View:

    Published on: October 21, 2016

    • The Chicago Cubs defeated the Los Angeles Dodgers 8-4 last night, taking a 3-2 game lead in the best-of-seven National League Championship Series. The Cubbies now are within one game of facing off against the Cleveland Indians in the World Series.

    In case you've been living in a cave, it is important to know that the Cubs have not won a World Series in 108 years, and have not been to a World Series since 1945.

    • In Thursday Night Football action, the Green Bay Packers defeated the Chicago Bears 26-10.
    KC's View:

    Published on: October 21, 2016

    There is a particular kind of movie that I enjoy. They are solid entertainments, usually featuring actors who may be a little past their commercial prime but still firing creatively on all cylinders. They tend to have modest budgets (which these days means in the $50 million range), not a ton of special effects, and a fair amount of plot-driven action (as opposed to gratuitous violence).

    In recent years, these movies generally have starred Liam Neeson, though actors such as Kevin Costner and Pierce Brosnan have found homes in similar vehicles.

    There are two such movies in theaters right now - one of which works very well, and one that doesn't.

    The Accountant isn't a pure version of the kind of movie I enjoy, if only because star Ben Affleck is a hot commodity right now. But as a solid drama about a high-functioning autistic man who makes his living cooking the books for a variety of criminal enterprises, The Accountant does exactly what it needs to do. Affleck is solid in the title role, able to capture the man's inner life as well as the high risk world in which he is able to find some sort of professional solace.

    The movie strings together several plot lines that unfold simultaneously, and does so efficiently, with strong supporting performances from the likes of JK Simmons, Jeffrey Tambor, John Lithgow and the wonderful Anna Kendrick. And there's even a neat little plot twist that I didn't see coming, and I usually have a pretty good radar for these sorts of things.

    The Accountant isn't a perfect movie, but it works well, and does exactly what it is designed to do.

    I wish that I could say the same for Jack Reacher: Never Goes Back, a sequel to the 2012 Jack Reacher that was the first film based on the highly popular series of Lee Child novels. The first film was a model of the genre film, but this new one simultaneously tries too hard and yet not hard enough.

    The plot, wildly simplified from the novel, has to do with Reacher trying to help an Army Major who he feels has been unjustly accused of treason. There is, of course, a conspiracy at work, and loner Reacher is the only one who can unravel it.

    The problem with the movie is that it feels like I've seen it dozens of times before - from the requisite scenes of Cruise running (which he does in pretty much every movie he's in) to the New Orleans finale that offers no surprises. And Cruise, who has tons of charm even if you;re not a big fan, seems to be acting at every moment - his scenes and reactions all seem calculated, not real.

    Now, part of this may be because the books' Jack Reacher is consistently described as a hulk of a man - 6 foot 5 inches, maybe 250 pounds, heavily muscled and with blonde hair. Cruise is none of these things, and so he seems entirely focused on acting tough - he's so tense that his whole body seems clenched. (For the record, I don't worry about such casting decisions. Humphrey Bogart was a lot smaller than the Phillip Marlowe described in the Raymond Chandler books, and Daniel Craig physically does not embody the James Bond of the Ian Fleming novels. But they're both so good that the descriptions of the novels don't matter. Cruise isn't.)

    I'm thinking that if they make another Jack Reacher movie, they ought to recast it with an older, wearier actor. Liam Neeson, maybe.

    That's it for this week. have a great weekend, and I'll see you Monday.

    KC's View: