business news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: March 10, 2017

    by Kevin Coupe

    This is a case where people quite literally will be able to put their money where their mouths are.

    Travel & Leisure reports on how the Scottish beer company BrewDog plans to open the “world’s first crowdfunded craft beer hotel" in Columbus, Ohio, which will be attached to the brewery it is building there.

    The story says that among the amenities that will be offered in the BrewDog hotel are "a tap in every room featuring Punk IPA, the brand’s flagship brew" ... "a beer-stocked mini-bar in every shower, so you never have to go a second without a beer in hand" ... "access to limited-edition brews from the brewery next door" ... "a spa that uses beer in its products and treatments, such as hop oils and a malted barley massage" ... and "craft-beer pairings during breakfast, lunch, and dinner."

    Be still my heart. I am verklempt.

    I wonder if they'll have a Norm Peterson suite? Or a Spenser booth in the bar?

    If you want to check out the crowdfunding effort on IndieGoGo, click here. For the record, as of this writing they've raised almost $175,000, or 226 percent of the their original stated goal. They've got 23 days of fundraising left, and I plan to throw a little cash their way.

    If plans proceed as expected, BrewDog hopes to have the hotel up and running by fall 2018. Which means I have plenty of time to start planning my trip to Columbus, where inevitably I'll be doing a "FaceTime" video.

    It is ... and hopefully will be upon completion ... the very definition of an Eye-Opener.
    KC's View:

    Published on: March 10, 2017

    There are a couple of stories this morning about traditional bricks-and-mortar food retailers making greater investments in e-commerce...

    The Wall Street Journal takes the broader view, writing about how "grocery heavyweights including Wal-Mart Stores , Inc., Kroger Co. and Meijer, Inc. are broadening delivery areas across the country and the ways in which customers get their groceries ... Supermarkets were slow to mimic Amazon and other grocery-focused online delivery services like FreshDirect and Peapod. But competition for customers has become fiercer, as even older consumers outside of urban areas have warmed to online shopping.

    "To keep their business, grocers are organizing their own delivery services, striking deals with existing e-delivery companies or arranging for customers to pick up goods they order online in advance."

    The Journal writes that "Meijer is partnering with Shipt, an online service that employs personal shoppers to choose and deliver groceries to consumers ... Meijer said Thursday that it will start delivering groceries later this month in the six Midwestern states—Illinois, Indiana, Kentucky, Michigan, Ohio and Wisconsin—where its 230 stores are located ... Wal-Mart plans to double the number of locations where it offers curbside pickup to customers who buy their groceries online. The nation’s largest grocer also started a free, two-day delivery service earlier this year ... Kroger plans to use Uber drivers to deliver groceries to some customers this year. It began testing using Uber at its Harris Teeter stores in Washington, D.C., and Arlington, Charlottesville and Virginia Beach, in Virginia, along with Kroger stores most recently in Dallas."

    The Chicago Tribune also weighs in on the trend, reporting that "other Chicago-area retailers are still hammering out their own e-commerce plans. Executives with Jewel-Osco and Mariano's have indicated that their respective companies could have their own announcements coming soon but have stayed mum on details. Whole Foods Market offers delivery through Instacart."

    The Tribune writes that "though online shopping still represents a small percentage of grocery spending — some estimates put it about 2 percent — that looks to change dramatically in the near future. By 2025, online grocery shopping is projected to grow to 20 percent of all grocery spending, or $100 billion in annual sales, according to research from the Food Marketing Institute and Nielsen."
    KC's View:
    I'm not even sure I need to comment on this, since MNB's own Tom Furphy is quoted in the Journal story as saying, "These guys need to have a counterstrategy to hold on to customer volume."

    Bingo. Drop the mic.

    Published on: March 10, 2017

    Fortune is out with its annual list of the 100 Best Places To Work, and Wegmans is near the top of the list yet again, ranked number two, behind only Google.

    Rounding out the top 10 are The Boston Consulting Group, Baird, Edward Jones, Genentech, Ultimate Software, Salesforce, Acuity, and Quicken Loans.

    Other companies on the list that may be of interest include Publix (#21), REI (#28), Nugget Market (#30), The Container Store (#49), Whole Foods (#58), Quik Trip (#68), Sheetz (#87), and Nordstrom (#94).
    KC's View:
    I always think that as interesting as this list is, it is important to note that it is a highly selective snapshot of a moment. To make the list, you actually have to apply for consideration, and I know of companies that used to do it that no longer do so because the task became so onerous.

    Also, it is highly subjective. Wegmans once was number one; it is really any worse an employer because it now is number two? The Container Store is number 49, but it once was number one; does this really represent a decline?

    It is interesting to see that Fortune plans to adjust the way it evaluates companies. In the past, it says, "The result has been a two-decade tour de force showcasing industry-leading benefits, like Adobe's six-month paid maternity leave, and mind-bending perks, like Publix’s holiday bonus of up to a month’s wages for supermarket employees. But far more important than any lavish policy or fancy freebie, employees in the organizations on this list say they trust their coworkers and managers."

    In the future, they say, because "research finds major disparities among the experiences of frontline employees, as well as by gender, race, and full- or part-time position," the evaluations will put "a new focus on the companies that are bringing out the best in everybody, from the boiler room to the corner office. Our new methodology, which will be rolled out in full for the 2018 list, emphasizes the consistency of employees’ experiences, regardless of who they are or what they do, rather than looking primarily at company­wide averages."

    It'll be interesting to see how this affects the 2018 list.

    Published on: March 10, 2017

    Continuing its long decline in the face of changed consumer behavior and ever-toughening online competition, Staples aid yesterday that its Q4 same-store sales were down 7.4 percent, and promptly announced that it would close 70 store in North America.

    Bloomberg writes that "the store-closing move, which follows the elimination of 48 locations in 2016, will affect about 5 percent of stores in North America. Staples had 1,255 locations in the U.S. and 304 in Canada at the end of the last fiscal year.

    "Winnowing its store count is part of Staples' plan to shift away from traditional brick-and-mortar retail. The company is looking to sell more business services and connect with customers online."

    The story notes that the poor results and new store closings come a year after Staples' attempt to acquire Office Depot was rejected by federal regulators on antitrust grounds; regulators argued "that it would hurt business customers."
    KC's View:
    I argued throughout the debate about Staples trying to buy Office Depot that it might be the only way for the two companies to survive, and that regulators rejecting it would be guilty of using old world competition models in making their evaluations.

    Look, I'm no fan of Staples. I've made that clear here and here. And it seems to me that despite all the posturing about how it is reinventing itself for the digital economy, I've seen very little actual evidence of the kind of innovations that would really distinguish and differentiate it.

    Published on: March 10, 2017

    Re/code reports that Amazon has confirmed that it will open its 10th Amazon Books store in the Bellevue Square shopping center across Lake Washington from Seattle.

    The story frames the development this way:

    "If it wasn’t clear before, it is now: Amazon really likes the traction it has seen in the four stores that have opened so far and is committed to becoming a physical retailer at scale. New locations are opening in places like Chicago, New York City and the suburbs of New Jersey later this year.

    "That doesn’t mean the stores still aren’t puzzling. Why does Amazon — bookstore killer — want to become a physical book purveyor? One smart take has been that the stores are as much about selling Amazon devices like the Echo and Kindle as they are about selling books."

    And, Re/code goes on: "The stores are also an indirect showcase for the Amazon Prime membership program, because Prime members pay considerably less for books than non-members do. Industry insiders speculate that Amazon could also eventually expand its 'just walk out technology' from its new Amazon Go convenience store to Amazon Books locations, as well."
    KC's View:
    I think they're right. This is more than just a whimsical effort.

    There's something happening here. What it is ain't exactly clear... seems to be getting clearer every day.

    Published on: March 10, 2017

    • Raley's said yesterday that its eponymous stores and Nob Hill Stores unit are expanding "their eCart program to many of their Bay Area stores. The enhanced system improves upon the current online order and curbside pickup solutions across all existing eCommerce-enabled locations ... eCart allows shoppers in 95 stores to order groceries online and pick up curbside at a local Raley’s, Bel Air Market or Nob Hill Foods ... The program features an enhanced user interface that allows customers to move seamlessly between a mobile device and a desktop computer."

    The company defines eCart as "a natural extension of Raley's commitment to world class customer service: shoppers have the ability to specify produce preferences which are hand selected by a Raley's e-commerce personal shopper. They also can save: the first three orders for all customers are free and the shopper fee is waived for any orders of $150 or more. Payment is conveniently accepted at a customer's car or online."
    KC's View:

    Published on: March 10, 2017

    • In Minnesota, the Star Tribune reports that "Thursday is the new Sunday in the eyes of Cub Foods. Prices in weekly ads that display sale items used to be in effect Sunday through the following Saturday. Early last month, Cub Foods changed the ad cycle to Thursday through Wednesday."

    The story says that the switch was made because Saturday and Sunday are the busiest shopping days, and displays were being changed at a time when it was more problematic for shoppers. "We feel bad there’s been a concern about the change, but the change is rooted in doing what’s best for customers,” says Cub Foods spokesman Jeff Swanson.

    Newspaper? Coupons? Weekly print ads? Je ne comprends pas...
    KC's View:

    Published on: March 10, 2017

    • The Wall Street Journal reports that Brad Maiorino, the information security chief at Target who was hired several years ago to help the company deal with a massive data breach, has departed the company to join Booz Allen Hamilton "as an executive vice president responsible for growing the defense contractor’s U.S. commercial business."

    The Journal writes that "Rich Agostino, who joined the retailer in 2014 as VP of information security after more than a decade at GE, was named as Mr. Maiorino’s replacement, effective immediately."

    • The Baltimore Sun reports that Jim Perdue is stepping down as CEO of Perdue Farms, promoting COO Randy Day to become "the second non-family member to lead the Salisbury-based poultry company."

    Perdue, who has been CEO since 1991, will remain as the company's chairman and brand spokesman.
    KC's View:

    Published on: March 10, 2017

    Yesterday, we posted an email from an MNB reader that attacked me for being blind to what he said were "the evils of Amazon" and the damage it is doing to the country. He wrote, in part:

    You and people like you need to: 1) stop thinking you’re more important than you are. 2) Stop thinking you’re busier than you are, you’re not, and 3) open your eyes to what’s happening on an almost weekly basis to brick and mortar retailers (HHGregg and Gordmans in the last two weeks.)

    Easy to blame the retailer, and they have plenty of culpability, but if you refuse to place at least some blame on Amazon, your obsession has blinded you to reality...and what’s coming next.

    MNB reader Mary Schroeder responded:

    Well, Shame on You Kevin.  The evils of Amazon are all your fault.  Not only are you forcing children to think like machines but you think you’re important.

    I’m hoping whoever wrote this was just having a bad day and in need of venting.  I gave up b*tching for Lent and I do miss the venting opportunities that provided. 

    That aside, absolutely Amazon has an effect.  You can’t be that large and NOT have some sort of effect.  It’s incumbent upon all of us to act and react accordingly…not sit aside like retail road kill and watch the end approach.  The key is to act, react and repeat as necessary.

    Just an observation (not a b*tch session).

    In fairness to the original MNB reader, this is part of a long conversation/debate that we've been having about whether Amazon is evil or not. He thinks it is, and I disagree. I think Amazon represents the kind of progress and innovation that I wish America were capable of in all aspects of public policy ... and that companies that do not adapt and meet the challenge have only themselves to blame.

    I suspect he thinks I should burn in hell for such statements. (I'm kidding. I think.)

    But it is, I think, a respectful and legitimate discussion. I'm thrilled when people write in to challenge me for my ideas and statements. It keeps me honest, and it keeps me thinking.

    On another subject, got the following email from MNB reader John Rand:

    Interesting to read about the diversification of the hotel industry.

    A lot of parallels in my mind between hotels, airlines, and supermarket organizations in the way they evolve – or don’t. Maybe it is a universal business process of change.

    I have been a ridiculously frequent traveler for many years, averaging over 100,00 air miles in just domestic flights most years, and many dozens of nights in hotels. I used to be able to rely on certain airlines, certain hotels, as marques or brands that provided something better, different, and above all reliable.

    Gradually that has changed. The planes became crowded and more impersonal and we all know how degraded that experience has become. Hotels that used to make you feel sort of “at home” have redesigned their rooms to be “cool” but often far less functional. (Whatever happened to having drawers so you could unpack a little?)

    The loss of room service may not be a huge loss to some (I recall you saying you really don’t miss it yourself)  but when I cruise into a new town at odd hours from another time zone, especially in a suburban or airport-area location,  and my blood sugar is low (I am “mildly” diabetic but it still requires some fundamental management) and they no longer have food available – that is simply not a feasible place to stay. And  some pretty big chains are doing exactly that, glossing over the fundamentals, reducing staff and services, putting a gloss of plastic fashion on top of a downward spiral of experience.

    So they reduce what they offer and yet still charge more. They reduce the personality and service component to save money. They make rooms and planes that are cheaper to furnish and clean but less comfortable. They nickel-and-dime you to death.

    And people flock to Airbnb or other alternatives,  they move to budget hotels because they might as well save money when they can’t get a better quality experience for the higher price at the  formerly “better” chains. And the brand value of the offer goes down.

    There is a parallel here. The retailers who are most at risk almost always have lowered their standards. Cheapened their dedication to quality execution. Lowered the return to the customer for the dollar spent. And imitate each other in the process to where they are all at risk of becoming one indivisible lump of mediocrity. Once great retailing brands become unreliable, then irrelevant, then a source of sad amusement, then dead.

    The ones who succeed move down to Value or up to Quality. There is no middle ground.

    MNB took note yesterday of a Bloomberg report that Starbucks has been losing market share this winter - in February it was down to an 11 percent share of all the restaurant chains evaluated by research form xAd, compared to 12 percent during January.

    A variety of factors were cited in the report, including aggressive promotions from competitors. But one of the other issues cited - that got the attention of several MNB readers - was negative public reaction from some quarters to positions taken by CEO Howard Schultz that are seen as anti-Trump administration, including the hiring of refugees at stores around the world.

    One MNB reader wrote:

    I haven't had a Starbucks drink since Shultz made his statement public. I feel great and in sure that they don't miss my $25 per week.

    I think voting with your wallet works.

    And another MNB reader wrote:

    I’m sure their support of refugees over American Vets is taking a toll.

    That’s the difference between us.  I’ve decided to feel good about the fact that they’re hiring thousand of veterans in the US, as opposed to feeling bad about the fact that they’re hiring thousands of refugees around the world. (The decline in store traffic may mean that I am in the minority in this.)

    And by the way, the legal definition is a person who, "owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country; or who, not having a nationality and being outside the country of his former habitual residence as a result of such events, is unable or, owing to such fear, is unwilling to return to it."

    In other words, a refugee is someone who has been displaced from their home country for a variety of political reasons, and cannot return safely.

    In general - and I'm sure there are some bad dudes who slip through - this seems like a group worth helping. And more importantly, hiring ... so they can help themselves.

    Somehow, we as a culture have managed to conflate the words "immigrant," "illegal immigrant," and "refugee." I'm not sure how this has happened, but I am pretty sure that it is inaccurate.

    Starbucks said it would hire 10,000 veterans and vet spouses in the US, and they're reportedly close to 90 percent to their goal. It may be politically facile to say that the company is less committed to vets than to refugees, but it also strikes me as factually inaccurate when you look at the numbers.

    One other thing.

    F. Scott Fitzgerald once wrote that "the test of a first rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function."

    I'm not even sure these are opposing ideas - the notion that Starbucks can be committed to vets and be committed to dealing with the plight of refugees. But I see absolutely no reason that it cannot do both. And in fact, it seems entirely in character for the company to want to do both and to commit resources to both.

    Unless, of course, this possibility does not fit with a pre-conceived narrative.

    Along these lines, an email from MNB reader Mark Boyer:

    I struggled how to write this for fear of being labeled for or against a political persuasion; that would miss the point. My concern is, “When did we decide to stop being civil as a society?” I suspect there wasn’t a specific moment in time when the pendulum swung so dramatically from one side to another, but however it swung, it’s not good.

    I hope we can someday return to civil discourse. When impressionable people see that it is seemingly okay to smear and mock and threaten boycotts and belittle someone or some business so openly in public it doesn’t give me much hope for a civil society. That’s unfortunate. Someone once told me if you don’t like something, either become a positive force to affect change, or quietly move away and find an alternative better suited to you.

    I do think that we're not in a period when many people will "quietly move away" from people and issues with which they disagree.

    Maybe that's okay.

    It makes me think about a quote from Robert Bolt's "A Man For All Seasons" that I reference here from time to time. It is a point in the play when Sir Thomas More, faced with execution if he will not agree with King Henry VIII's decision to divorce his wife and marry Anne Boleyn just because he is the king, and because to disagree with the king is seen as being disloyal to the nation, makes the following statement:

    “If we lived in a State where virtue was profitable, common sense would make us good, and greed would make us saintly. And we'd live like animals or angels in the happy land that needs no heroes.

    But since in fact we see that avarice, anger, envy, pride, sloth, lust and stupidity commonly profit far beyond humility, chastity, fortitude, justice and thought, and have to choose, to be human at all... why then perhaps we must stand fast a little --even at the risk of being heroes.”
    KC's View:

    Published on: March 10, 2017

    Remember ... for most of us in the US, this weekend marks the end of Standard Time and a blessed return to Daylight Savings Time. On Sunday, March 12, at 2 am, it will be time to turn your clocks forward an hour. (Assuming, of course, you have clocks that require manual changing.)

    It also will mean it'll be just three weeks until Opening Day in Major League Baseball. I don't know about you, but these days I find myself thinking that there are three things that are absolutely necessary to getting through the tumult - late night comics, alcohol, and the anticipated return of baseball.
    KC's View:

    Published on: March 10, 2017

    Most superhero/comic book movies tend to be about archetypes rather than people - usually white guys - who for whatever reason are gifted with exceptional abilities and then use them to help others. The Batman movies are about a guy wrestling with his demons, and then using those demons as a way to help others.

    But the Wolverine movies, at some level, have always been about a guy who is a mutant with exceptional abilities, who is mostly trying to be a better man. And Logan, the 10th film in which Hugh Jackman has appeared at the titular character, takes that theme to the next level in an R-rated movie that is part Unforgiven, part Mad Max, and part Shane.

    The movie is set in 2029, with none of the joie de vivre that one expects of comic book movies, and especially the X-Men movies, which generally have been among the least ambitious of the genre (though the hostile treatment of mutants always has been a kind of allegory for how our society has marginalized black people, Asians, gay people, trans people, and others at various points in hour history). Logan/Wolverine, who has had the power to regenerate and never age, has finally begun to get old and sick, and he carries the weight of more than a century of living and the loss of virtually every friend and loved one. His main job is to care for Charles Xavier, the ninety-something founder of the X-Men, a powerful telepath who is suffering from some sort of severe dementia that causes him to have seizure-induced psychic episodes that threaten all around him. For all they know, the rest of the mutant population has died off or been killed.

    Logan becomes a road movie when a young girl, Laura, is placed in Logan's and Xavier's care; she seems to share some of Logan's mutant characteristics, and Xavier believes that the only way to save her from people who would harm or exploit her is to escort her to Canada, where there may be a kind of "Eden" in which mutants can live in peace. But it is a trip fraught with complications, challenges and random, visceral violence, but also with two men trying to get in touch with their better natures. It is not easy, and Logan can be explicit about the acts and cost of the violence that has defined its hero's life. But as directed by James Mangold and acted with deep conviction by Jackman and Patrick Stewart as Xavier, it is a surprisingly moving and deep piece of moviemaking, and quite possible the best of its genre.

    I debated long and hard before watching Hacksaw Ridge, the Mel Gibson-directed movie about Desmond Doss, a real life figure who was the first conscientious objector to be awarded the Medal of Honor. Gibson's reputation for anti-Semitism is such that I find it hard to get past it, yet this subject matter interested me so I rented the movie.

    Hacksaw Ridge, as it happens, is a strong piece of work, effectively portraying Doss's decision to enlist in the Army because he wanted to serve, despite the fact that his religious beliefs prevented him from picking up a gun. This creates a series of conflicts - with the military leaders who don't understand him, the fellow soldiers who don't trust him, and finally with the enemy soldiers he must confront in at Hacksaw Ridge on Okinawa, where as a medic he is charged with saving lives, not taking them.

    This all works well onscreen, though I must confess that there is very little that is subtle about it. Subtle is a color with which Gibson is unfamiliar, which somehow - considering some of his expressed beliefs - is not surprising. Gibson's best weapon in this is Andrew Garfield, who manages to offer shadings of longing, regret, guilt and horror in his performance.

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

    KC's View: