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    Published on: February 10, 2017

    by Kevin Coupe

    Two fast feeders are taking steps to expand their appeal this week.

    Domino's announced that it is launching a wedding registry. USA Today writes that the chain "is offering e-gift cards of various denominations, so friends and family can treat the couple to everything from food for a bachelorette party to a post-nuptials date night. Examples of packages include 'Bust Out the Fine China' and 'The Wedding Night'." The goal is to get a slice of the $58 billion wedding industry.

    At the same time, McDonald's said that it is introducing a snow crab sandwich in four San Francisco-area restaurants. It is, USA Today writes, "at least the second attempt by the burger maker to tap into the Bay Area food scene for inspiration. In May, the company unveiled the made-to-order Gilroy Garlic Fries, made with garlic from Gilroy, California. The garlic fries were served in four restaurants in South Bay ... If all goes well, the sandwich could be available in about 250 stores later this year. The same promise was made when the garlic fries came out. Now they're available in nearly 240 stores throughout the Greater Bay Area."

    To be honest, the Domino's offering is a little cheesy for me. But the snow crab sandwich, which is described as "mixed with celery and seasoned mayo on romaine lettuce and tomato, on sourdough bun?" I'd try that.

    Why not? Maybe it would be an Eye-Opener.
    KC's View:

    Published on: February 10, 2017

    The Harris Poll is out with its annual evaluation of America's most visible companies' reputations, identifying what it calls "movement, trends and insights in a changing corporate reputation landscape." One thing, however, did not move - Amazon's ranking at the top of the class, which is unchanged since last year.

    Two other retailers - Wegmans and Publix - moved into the second and third positions, supplanting Apple and Google, which had those rankings last year.

    The rest of this year's top 10, in order, were Johnson & Johnson, Apple, UPS, Disney, Google, Tesla, and 3M. In 2016, the rest of the top 10 were, in order, Google, USAA, Disney, Publix, Samsung, Berkshire Hathaway, Johnson & Johnson, and Kellogg.

    The bottom 10 this year consists of a rogue's gallery of companies plagued by controversial or negative headlines - Volkswagen, AIG, Charter Communications, Sears, Bank of America, Halliburton, Monsanto, Goldman Sachs, Wells Fargo, and, in the bottom position, Takata (the company that made faulty airbags that resulted in at least 17 deaths and that has agreed to pay regulators, consumers and car manufacturers $1 billion in penalties).

    But in a reflection of the polarized times in which we live, Harris also pointed out that companies' reputations often depend on the positions they take and the politics of the people who are being surveyed, "that Americans view the reputations of some companies as aligned with their individual values. Republicans hold the reputations of Chick-fil-A and Hobby Lobby--companies that have vocally shared their conservative beliefs--significantly more favorably than Democrats do. Democrats perceive Target's reputation more positively."

    "Values play a bigger role than ever before in corporate reputation, and the business significance of a company's reputation has never been higher," says Mark J. Penn, managing partner and president of The Stagwell Group, which owns The Harris Poll. "Consumers are keenly interested in how companies engage with the world, and that includes corporate ideals. As the red versus blue duel of politics impacts corporate reputation, we expect to see more alignment along party beliefs."

    The company says that the poll "measures companies' reputation strength based on the perceptions of more than 23,000 Americans across six corporate reputation dimensions: Social Responsibility, Emotional Appeal, Products and Services, Vision and Leadership, Financial Performance, and Workplace Environment."

    You can see the entire list of 100 companies ranked in the poll here.
    KC's View:
    I think perhaps the most surprising ranking was that of Starbucks - which came in at 55, lower even than the US Postal Service. I cannot imagine that Howard Schultz is walking around the company's Seattle headquarters today saying to people, "Fifty-five isn't so bad. It is better than Chipotle! And a helluva lot better than Takata!"

    That said, it must be pointed out that the differences in rankings can sometimes be marginal, and probably are a snapshot rather than a mural. But I do think that businesses ought to be looking at what the top companies have in common and trying to figure out how to engineer such values into their own cultures. (Frankly, I think anyone who came in below the Post Office ought to be rethinking their strategies.)

    Published on: February 10, 2017

    Whole Foods, which this week already has announced that it plans to close nine store and slow down its expansion plans because of disappointing sales and profits, said yesterday that it "has selected dunnhumby as a strategic partner to evolve Whole Foods Market’s category management and merchandising fueled by customer data and insights" that "will enable Whole Foods Market to create the shopping experiences customers want, helping them find the products, services, brands, sizes, and flavors they are looking for faster and easier. As product choices and preferences change and vary by location, using data to provide customers with the most relevant shopping experience is the best way to satisfy their needs and earn long-term loyalty."
    KC's View:
    I'm told that this is a big win for dunnhumby, the first big national account win since its split from Kroger, though it has had success working with Raley’s on the west coast and Metro in Canada.

    I'm sure that one of the attractions for Whole Foods is the fact that Kroger did so well using dunnhumby technology, but Kroger had this success over a decade. Whole Foods doesn't have that kind of time. The success of this pairing will depend to a great extent on speed of execution, and Whole Foods' ability to integrate the dunnhumby offering into things like its nascent frequent shopper program.

    One expert told me that "Whole Foods needs to better align with their changing customer.  Time is not on any retailer's side, so it is imperative that this change happen sooner, than later." I totally agree. This move by Whole Foods makes sense, but now they have to deliver on the promise.

    Published on: February 10, 2017

    The Associated Press reports that Kellogg's CEO John Bryant is saying that the company has seen "no 'discernible' effect from an online boycott spurred by its decision to pull ads from a website formerly run by one of President Trump’s top aides ... Kellogg had announced its decision in late November to pull ads from, which has been criticized for featuring racist, sexist and anti-Semitic content."

    The story goes on to note that "for the last three months of 2016, Kellogg said its U.S. cereal sales were flat. The company has been dealing with slumping cereal sales for years as people reach for a variety of different breakfast options and the image of Special K, one of its biggest brands, has become outdated ... To improve its financial performance, Kellogg has also been slashing costs and this week noted that it will end all direct delivery of products to supermarkets and big-box retailers. Instead, it will ship those products to warehouses before they move to retailers’ distribution centers — a system the company already uses for the majority of its products."
    KC's View:

    Published on: February 10, 2017

    The Wall Street Journal reports that Amazon has decided to get into the intimate apparel business, pricing products in a way that will challenge the likes of Victoria's Secret.

    According to the story, Amazon "plans to start selling its own line of competitively priced women’s intimate apparel on its U.S. website, according to people familiar with the matter, something that could begin in the next several weeks. It recently started selling bras for under $10 in Europe, where it uses the label Iris & Lilly.

    "Amazon’s entrance into the lingerie space presents a challenge for industry stalwarts such as PVH Corp. ’s Calvin Klein and L Brands Inc. ’s Victoria’s Secret, which have built their businesses on bras that retail at around $40. Amazon, which already sells intimate apparel from several department-store brands, has a history of leveraging consumer data from its online listings and offering cut-rate prices to grab market share." In all likelihood, Amazon would be sacrificing margin to get a foothold in the market.

    The Journal goes on to say that "lingerie has been among the last e-commerce holdouts because fit and comfort are often hard to assess online. But a shift in consumer preferences toward garments with more simple sizing—such as sports bras and bralettes—makes it easier for online sellers to attract buyers. Several e-commerce-driven startups use fit surveys and free returns to help lingerie shoppers make the leap."
    KC's View:
    To me, the instructive part of this story is the point about how Amazon uses data that it is able to gather from third-party Marketplace sales to decide what categories it can attack with its own offerings. That's something that anybody doing business with Amazon needs to think about. It isn't unique to Amazon; lots of retailers decide on private label offerings based on the categories where national brands have been successful. But when Amazon does it, the impact can be far greater because its reach and resources seem endless.

    Published on: February 10, 2017

    • The Houston Business Journal reports that Greek yogurt manufacturer Chobani, which operates two yogurt in New York City, plans to open a third one. In Houston, Texas. In a Walmart Supercenter. According to the story, "Many items on the Mediterranean-inspired menu include the brand’s Greek yogurt, including salad dressings, smoothies and more."

    The new Supercenter also "will be among the first in the U.S. to include a variety of the company’s new features. Most notably, it will be the company’s third store to utilize its new Scan & Go app. So far, the app can be used at one location in Arkansas and a store in Florida that opened late last month. The new app will allow customers to scan items on their phone while shopping in the store and pay for them instantly, skipping the checkout process."
    KC's View:

    Published on: February 10, 2017

    CNBC reports that the National Retail Federation (NRF) is projecting that "retail sales in 2017 are expected to grow roughly in line with last year's 3.8 percent gain, as rising wages, lower unemployment and a solid housing market drive consumer confidence higher.

    "However, with many tax and trade policies still up in the air under the Trump administration, consumers are expected to continue being methodical with their spending ... The organization's forecast does not include potential legislation that could come from Washington, D.C., including the controversial border adjustment tax."

    NRF also is saying that "online and other non-store sales are expected to increase between 8 percent and 12 percent."

    • The Wall Street Journal reports that "Reckitt Benckiser Group PLC on Friday said it agreed to buy baby-food maker Mead Johnson Nutrition Co. for $16.6 billion, a deal that will almost double the size of the British company’s consumer-health business and help it push deeper into emerging markets.

    Reckitt Benckiser CEO Rakesh Kapoor said that the Mean Johnson business fits into his company's "consumer-health portfolio tangentially, just like its condom and foot-care brand acquisitions have in the past. 'Our strategy is about healthier lives and homes,' he said. 'Their mission is about enabling healthier lives from the very beginning'."

    • The Associated Press reports that "the U.S. Postal Service said Thursday it lost $200 million during the year-end holiday season, despite a strong quarter of package shipping and expanded use of vote-by-mail in the November presidential election." The results reflect "continued erosion in the delivery of first-class mail as well as expensive mandates for pre-funding of its retiree health care obligations."
    KC's View:

    Published on: February 10, 2017

    • Claire Babineaux-Fontenot, Executive Vice President and Treasurer of Walmart Stores, Inc., has announced her intention to leave the company at the end of April. Published report say that she made the decision after a recent health scare, in order to move closer to her family in Dallas.
    KC's View:

    Published on: February 10, 2017

    ...will return next week.
    KC's View:

    Published on: February 10, 2017

    I grew up in New York's Westchester County and have lived my adult life in Connecticut's Fairfield County, always in towns that rested on the shores of Long Island Sound. We could always look across the largely placid waters and think of Long Island in two ways - either the tract homes that were built after World War II to house the many families that wanted to move to affordable suburbs, or the fancy, Gatsby-like homes in the Hamptons, where people far more worldly than we lived out their fanciful lives.

    Reed Farrel Coleman, the gritty mystery novelist known for his Moe Prager series of novels (and, more recently, for taking up the challenge of succeeding the late Robert B. Parker and writing new Jesse Stone novels), apparently sees Long Island through a different prism. He's out with his second novel about Gus Murphy, a retired Long Island cop who has suffered through enormous personal tragedy and now is living out his days driving a hotel van and doing occasional security work. For Murphy, Long Island is a darker, grimmer place, dominated by secrets and shadows and broken people just trying to survive.

    In "What You Break," just out this week, Coleman paints his narrative with deep, somber colors, just as he did in "Where It Hurts," the first in the series. Murphy finds himself involved in two different cases - trying to protect his friend Slava, a fellow hotel employee who finds that the sins of his past have come back to haunt him, and helping a rich man find out why his granddaughter was murdered. In both cases, it is not a matter of determining the facts; rather, he has to determine motive and rationale and levels of guilt. Like the shadows of Long Island's tougher neighborhoods and, to coin a phrase from Raymond Chandler, mean streets, the lines can be indistinct. Murphy's choices are rarely simple, and while the book is a pleasure to read, one cannot help but feel a sense of impending dread.

    Reed Farrel Coleman s a wonderful novelist. Not only do I look forward to his new works, but I'm working my way slowly through his backlist. I suggest you do the same.

    A guilty admission here. In spite of myself, I've always sort of liked both the book and movie versions of Dan Brown's "The Da Vinci Code" and "Angels & Demons." Not that they were either great literature or great cinema, but they were basically pretty good yarns. In both cases, I preferred the book versions. The movies, starring Tom Hanks as Harvard symbologist Robert Langdon and directed by Ron Howard, always suffered a bit from adhering too closely to the books - there was never much surprise or spontaneity (largely, I think, because Howard is a fairly straightforward but mostly uninventive director). But I liked Hanks in the role, I liked the various European locales, and so I went along for the ride and enjoyed the movies for what they were.

    When the latest Langdon movie, "Inferno," came out, I decided I wasn't going to read the book, and see if it made any difference. I finally streamed the move this week, and the answer is, not much.

    "Inferno" is a lesser story than the other two, and ends up being much ado about nothing. Howard actually brings higher energy to this movie than the others, while Hanks is older now, the mileage on the character sort of works. But I cannot recommend it. "Inferno" is like fast food, and not even the good stuff that you love in spite of yourself. It's more like the kind that you wish you hadn't eaten when the meal is over.

    I have a terrific beer to recommend to you this week - the Lead Feather Black Ale, from the Half Acre Beer Company in Illinois. I had some last week with the arancini at Eataly in Chicago, and it was hearty and delicious.

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


    KC's View: