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    Published on: April 24, 2017

    by Kevin Coupe

    The Dayton Daily News has a story about how iconic food retailer Dorothy Lane Market "has taken over direct control of the sushi shops that it previously leased to a subcontractor" in its three stores.

    Jack Gridley, the company's vice president of meat and seafood, tells the paper that "we saw the opportunity to go to the next level and increase the customer experience. With us controlling all the ingredients, we can greatly improve the quality."

    Gridley goes on: "“There will be many more options and combinations available in the case, with more species of fish offered than ever before. We will also be using the same quality of sustainably-sourced seafood that we sell in our seafood departments. That means that the salmon used in sushi will be raised antibiotic-free, just like what we sell."

    What impresses me about this has almost nothing to do with sushi.

    The argument here always is that retailers need to find ways to differentiate themselves in the marketplace, and to find every opportunity not to have "me, too" offerings. Success, I would argue, comes in the places where a store is different, not where it is the same.

    What really is extraordinary about this is that Dorothy Lane Market always has done this. Its three stores stand out as some of the best food retailing in the world - focused on great, highest common denominator food, and fueled by people who are utterly committed to and invested in their roles in a great company.

    It wouldn't be hard for Dorothy Lane Market to rest on its laurels, to decide that investing money in running its own sushi business wasn't necessary, that they already were as good or better than the competition. But that's not what they do at Dorothy Lane. Nope, what they do is look for every opportunity to be better, better, best. They know that great food can feed the soul, and they this mission with a kind of missionary zeal.

    The thing is, it never ends. They're already looking for the next opportunity. It'll be great. It'll be totally in character. And it'll be yet another Eye-Opener.
    KC's View:

    Published on: April 24, 2017

    Fortune has a piece about how Paul Cutsinger, who is in charge of code for Amazon's home assistant, Alexa, told a technology conference last Friday that computer design is about to undergo "a huge change" driven by both voice technology and artificial intelligence.

    "Design for the ear not the eye—throw away what we know about design today and start fresh," Cutsinger said. "We need to focus on how things sound, not how they look."

    And, the story says, "Cutsinger believes we're not far away from a world of 'ambient computing' in which today's simple interactions (such as 'Alexa, turn on the lights') will be replaced with rich and layered discussions. He gave the example of a student having a conversation with a biology textbook ... Cutsinger says developers and designs must reevaluate the use of text and writing. For instance, he points out the way we convey information in writing is very different than how we speak: the process of describing things in a list using commas (as we do when we write) is very efficient, but also comes across as cold and mechanical when spoken out loud."
    KC's View:
    Just another example of how the ground on which we all are walking is constantly shifting, sometimes tectonically ... and while that sometimes makes it difficult to get our footing, and often dictates that we take a path that we don't completely comprehend or expect, we have no choice but to embrace the moment.

    Or risk irrelevance and death.

    Published on: April 24, 2017

    The Cincinnati Business Courier quotes a Credit Suisse analyst as believing that if Kroger were to acquire Whole Foods - a deal that has been speculated about for some time, even if there has been no concrete evidence that either side has seriously considered it - it would "marry each company’s strengths with the other’s weaknesses, unlock massive cost synergies that could reach 3 percent of Whole Foods sales, help Kroger expand its customer base and possibly provide the growth format it has been eager to develop.”

    Edward Kelly is quoted as saying that "an acquisition would give Kroger, the nation’s largest operator of traditional supermarkets, the size and efficiencies to fight off competitors like Wal-Mart as well as newcomers to the food business such as meal kit provider Blue Apron."

    “Kroger has reached a crossroads in its strategy, as a decade-plus track record of share gains looks to be ending,” Kelly writes in his analysis. “Kroger now seems to have more incentive than ever to accelerate (mergers and acquisitions) to fill the void of weaker organic growth.”

    The Courier story notes that Kelly argues that "Kroger has a strong incentive to buy Whole Foods after its same-store sales declined for the first time in 13 years in the fourth quarter of fiscal 2016."
    KC's View:
    Maybe. But I'm not buying. Not just yet.

    Kroger hits one bump in the road, and analysts are ready to throw in the towel on more than a decade of savvy management, organic growth and selective acquisition ... and argue that Whole Foods is the answer to all Kroger's problems.

    I know retailers who think this is not the dumbest idea in the world, but I'm not there yet.

    Published on: April 24, 2017

    In Minnesota, the Star Tribune reports that Casey Carl, chief innovation and strategy officer at Target, is leaving the company.

    The story notes that "Carl has pushed Target to think about the direction of retail beyond the next few years, but the retailer has been dismantling a number of his projects, including a store-of-the-future concept with robots that was to be built in Silicon Valley. In their place, Target has focused on remodeling stores and lowering prices."

    CEO Brian Cornell wrote in a memo to employees that Carl's still-to-be-named replacement's job "will be to build upon the progress we've made. And while this leader will play a critical role in Target's innovation story, it's not a story they will write alone. Innovation must be a mind-set, an essential component of every business, every strategy and every team."
    KC's View:
    This departure reflects, I think, a directional decision by Target that may not play out the way the company hopes. At best, I am skeptical.

    Carl's appointment was one of the first decisions that Cornell made in 2014 when he became Target's CEO, and it indicated an understanding that the retailing landscape was changing and that Target needed to carve out a unique position for itself there.

    The Star Tribune writes that Carl "referred to himself as a 'chief agitator' whose duty it was to not only prod Target's merchandising and marketing teams to think more innovatively, but also to help the organization look out on the horizon to see how Target could start working on ideas now that would help better position it in five to 10 years."

    I think that retailers have to be able to both focus on its current store fleet and look 5-10 years out ... it isn't easy, it takes resources, and it requires a balancing act that satisfies customers, employees, and (in the case of public companies) shareholders. But I don't think that retailers seeking a sustainable business model and long-term viability have much choice.

    BTW ... the story also points out that Target has been seeing a lot of turnover in its executive suite, and that a number of the people leaving are folks who Cornell brought in to help him fix the company. I'm not suggesting that Cornell's job is in danger ... just that people are beginning to notice these things.

    Published on: April 24, 2017

    MarketWatch reports that Panera Bread plans to expand its delivery services to that they are available to as many as 40 percent of its stores by the end of the year, which will require the employment of some 10,000 drivers.

    The story notes that "Panera will also roll out a new tracking technology, so customers can track their orders and follow their delivery driver’s location on a map."

    Panera believes, the story says, that "expanded delivery is expected to add a quarter-million dollars per year to each store’s average annual revenue of $2.6 million."
    KC's View:
    In the fast food and fast-casual businesses, I think that strong mobile ordering and delivery options are going to be table stakes if they want to be relevant.

    Published on: April 24, 2017

    Marketing Land reports on a new survey of more than 1,600 merchants who sell on Amazon's Marketplace, revealing that "29 percent said they plan to expand their online sales efforts to Walmart this year. The same number of respondents said they had plans to begin selling on their own websites.

    "Ebay and Jet are also on their radar, with 23 percent planning to start selling on eBay and 22 percent on Jet (a Walmart-owned e-commerce site)."

    The survey indicates that "Amazon merchants with the highest volume of sales are most likely selling on other channels."
    KC's View:
    One of Amazon's great advantages has been its Marketplace/third party business, and I don't think there is any question that Marc Lore - now running Walmart's e-commerce business - would like to find a way to replicate or better it.

    Published on: April 24, 2017

    CNBC has a story about how Walmart's efforts to jump-start its e-commerce business have not alleviated concerns in some sectors about its broader impact on the business culture: "The company's supporters point to countless jobs it provides to low-skilled workers while selling affordable goods, but detractors fault Wal-Mart's encroachment on small businesses, and how it treats workers."

    While Walmart in recent years has made an effort to raise pay for workers in its stores, the story notes that "in total, Wal-Mart has eliminated about 18,000 jobs since early last year" - the suggestion being that wage increases don't just inhibit job creation, but also result in job losses.
    KC's View:

    Published on: April 24, 2017

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

    • In Texas, the Austin Statesman reports that Whole Foods will open a "365 by Whole Foods" store there this week, a 30,000-square-foot store that is "the first 365 location in Texas and the first 365 store anywhere to be built from the ground up."

    The "365" concept has been promoted as a way for Whole Foods to get away from its "whole paycheck" image and be more relevant to younger consumers, especially millennials, who see its traditional stores as distant from their needs and desires.

    • Multiple press reports say that The Fresh Market plans to close five stores - in Florida, Illinois, New Jersey, New York, Virginia - while planning to open a store this week in Columbia, South Carolina, that will feature an updated design and more traditional grocery products in addition to the specialty food products normally featured.

    CNBC reports that "Sears, which has been shuttering stores to boost its bottom line, announced more steps Friday to try to get its financial house in order, including finding an extra $250 million in savings and a new chief financial officer."

    Sears had hoped to save $1 billion this year, but that's no longer enough, and it now wants to generate additional savings "by cutting some senior management positions, and closing 92 pharmacies in Kmart stores, along with 50 Sears Auto Centers."

    According to the story, "Sears also said that Rob Riecker, the company's controller and head of capital market activities, is its new chief financial officer. He is taking over the position from Jason Hollar, who is leaving the company."

    Pretty soon they won't need a CFO, because they'll be no money to count.

    • In another Sears-related story, the writes that even as Sears collapses, owner/CEO Edward Lampert "may be smiling all the way to the bank, critics say. They charge that he has milked the venerable retailer dry since taking control of bankrupt Kmart in 2005 and using the retailer’s shares to help him acquire Sears, Roebuck & Co ... Most estimates have Lampert still in the black with about $1 billion in profits despite plunging sales and huge multibillion-dollar losses eroding much of that early gain, according to an analysis for The Post."

    That's because, analysts say, Lampert has stripped Sears "of every single shred of profitable component in order to make a profit for himself, and arguably investors, while employees and the public are left to deal with the rotten carcass."

    • MNB doesn't spend a lot of time writing about recalls, simply because they tend to be both localized and frequent ... there are other places better suited to getting that information, unless there are broader issues reflected in those recalls.

    On the other hand, we couldn't let this one go by, mostly because of the headline on the CNN story:

    Frozen hash brown recall due to possible 'extraneous golf ball materials'

    Golf balls? Really?

    According to the story, frozen hash browns sold in nine states under the Harris Teeter and Roundy's brands "may contain pieces of golf balls ... McCain Foods USA's recall notice on the US Food & Drug Administration site says the hash browns could be 'contaminated with extraneous golf ball materials' that 'may have been inadvertently harvested with potatoes used to make this product'."

    No injuries have been reported, the story says, and McCain has refused any additional comment.

    Which is silly, because this story begs for some comment. And unless McCain explains the circumstances under which golf balls got into the frozen hash browns, they're going to risk the possibility that anyone and everyone with a computer and an internet connection is going to speculate, which will make the company look worse, not better.
    KC's View:

    Published on: April 24, 2017

    Reuters reports that Walmart and Target, working with other retailers in conjunction with the Retail Industry Leaders Association (RILA), have decided to bet that the Trump administration will be unsuccessful in its desire to impose a 20 percent import tax. The bet - reflected in the decision to shelve "considerations to move supply bases closer to the United States" - is at least in part because they believe that lobbying efforts designed to persuade Congress that such an idea would be a bad one have been successful.

    The story notes that some estimates suggest that a 20 percent import tax could result in consumer prices that go up by as much as 25 percent.

    The story says that "the decision by retailers to forestall supply chain investment in countries such as Bolivia and Romania to focus on lobbying Congress shows how Mr. Trump's ambitious agenda has instilled a new level of risk operating outside US borders. But the vagueness around Trump's proposals and whether they may ever be implemented means retail industry executives are still not willing to change their operating infrastructure."

    Congressional consideration of a border tax bill would likely be "as messy as the healthcare bill," one RILA spokesman tells Reuters. The initial attempt to pass a healthcare bill that would repeal and replace the Affordable Care Act, more commonly known as "Obamacare," foundered not just because of difference between Republicans and Democrats, but also because of differing priorities within the GOP conference.
    KC's View:

    Published on: April 24, 2017

    Last Thursday, in FaceTime, I commented on an interesting piece in the Wall Street Journal this about a lawsuit that has been filed against PricewaterhouseCoopers, a company that proudly calls itself "the place to work for millennials" and each year recruits thousands of college graduates to join its ranks.

    The lawsuit was filed by two men - one 53 years old, the other 47 - who charge that PwC was guilty of age discrimination when it rejected their applications for entry-level positions. Normally, these sorts of suits are brought by older people who have been let go, but the Journalsuggests that this actually will be an interesting case to follow because the facts of the case put it in the realm of unsettled law.

    I argued, in part:

    Regardless of the legal technicalities, I do think that companies make a mistake if they automatically decide that someone in their late forties or early fifties isn't suitable for a startup position, or work under the belief that young people are by definition more "productive, creative, trainable and cheaper," as the Journal puts it.

    I'm simply not sure that's always true. If a person is in his or her forties or fifties and is willing to start over, it may well be because whatever it is they used to do is no longer a tenable way to make a living. I would think they'd be grateful for the opportunity, and that they might actually bring a great deal of energy, enthusiasm and dedication to any company willing to give them a shot. They also bring a lot of knowledge and experience - which in some cases might limit their vision, but in others might provide badly needed context and seasoning.

    One MNB reader wrote:

    Interesting lawsuit with PwC. Though unscientific, I believe age discrimination goes from entry level to more senior roles. Case in point: I interviewed for a VP Marketing role not too long ago, and was told I was “too experienced” for the position. I was 53 at the time. My guess was, “too experienced” is code for “too old.”

    From another reader:

    I think you are absolutely correct. I am currently contemplating whether a new career might be a good move, something completely different and I fall well into the older worker category. The thing is I don’t plan to retire for at least another 15 years, possibly longer depending on finances. I think companies need to cast a wide net and look for the best candidate regardless of age. They could end up with a great choice who is 21 or one who is 61.

    And from still another:

    Thanks for bringing the lawsuit on age-discrimination to the forefront.  My sister, at the ripe old age of 57, decided to re-enter the job market after more than 20 years managing her household.  She copiously researched self-marketing solutions and built a fantastic resume.  For one job opportunity she decided to go beyond just applying online.  She drove over to the company, went inside and personally dropped off her resume.  The receptionist was so surprised by this that she immediately referred my sister to the hiring manager.  She had an interview set-up before she got home and eventually was hired by the company in an entry level position.  Now, just over a year later, she was named employee of the year, was promoted and was selected to represent the region at a summit at the companies US headquarters.  I’m so glad this company looked past the salt 'n pepper hair and laugh lines.   They got one heck of an employee.

    Good for both your sister and the company. Your sister, for understanding that sometimes you need to play hardball when looking for new opportunities. And the company, for seeing beyond superficialities.

    I hope we hear more stories like this one.
    KC's View: