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    Published on: May 1, 2017

    by Kevin Coupe

    Go figure. Blockbuster Video, with its physical stores and iconic blue-and-yellow logo, isn't extinct. Yet.

    There are, in fact, 10 of them still in operation, according to the Washington Post. "However, the largest cluster of Blockbuster stores are not on the mainland, but in Alaska, where dark, long winters and expensive WiFi have helped maintain a core group of loyal customers."

    Seven of them are owned by licensee Alan Payne, who actually owns eight of the 10 - the other one, apparently a total outlier - is in Texas. "The most profitable Blockbuster store is in bitterly cold Fairbanks, where temperatures can reach 50 below zero," the Post writes.

    Which I guess is what is required to buck the technological headwinds that made Blockbuster almost extinct: "A great deal of the business’s endurance has come from the core customer base in Alaska, primarily made up of older people," the Post writes. "Alaska ranks high in disposable income among the states, due to good-paying jobs, exceptionally low taxes and payments from reinvested oil savings. Moreover, Internet service is substantially more expensive than in most states, since most data packages are not unlimited."

    The other thing that Payne believes has kept him in business is customer service - people actually like coming into his stores, where they can interact with store managers and staff. "“If you went in there on a Friday night," he says, "you’d be shocked at the number of people.”

    Yes, I would.

    But I'm sort of glad to know that there still are a couple of dinosaurs roaming the earth. And the story was an Eye-Opener.
    KC's View:

    Published on: May 1, 2017

    Bloomberg has a story about how a movement in the US House of Representatives to kill the current cap on interchange fees - charged on credit card and debit card purchases by Visa and Mastercard and paid to the banks - has created a political debate.

    Here's how Bloomberg frames the story:

    "At issue is part of the 2010 law that limits how much money banks can collect from retailers when consumers use their debit cards. House Financial Services Committee Chairman Jeb Hensarling wants to get rid of the fee cap now that Republicans control Congress and the White House.

    "But he’s facing resistance from other GOP lawmakers who either don’t agree with him or don’t want to pick sides in a high-stakes fight between corporate titans. Banks such as JPMorgan Chase & Co. have argued for years that it’s not the government’s role to set charges. Retailers such as Wal-Mart Stores Inc. counter that lower transaction fees lead to lower prices.

    "The fight is coming to a head with the financial services panel set to vote on a Hensarling bill next week that would overhaul much of the Dodd-Frank Act. While Republicans are eager to start the process of rolling back post-crisis financial rules, some aren’t thrilled that Hensarling’s legislation would overturn the cap on card fees."

    Of course, it may not matter, since even if the House of Representatives passes the bill, it would still have to get approved by the Senate, where a 60-vote majority would be required and would be highly improbable, seeing as Democrats have lined up against a repeal. In addition, major retailers and their trade associations have come out against a repeal of the swipe fee cap, and are exercising their considerable lobbying muscle.
    KC's View:
    I have to wonder if folks in the retail business are entirely comfortable with the fact that in the Senate, they will find themselves aligned with the interests of Sen. Elizabeth Warren (D-Massachusetts), who has been arguing vociferously against any such repeal.

    I'm guessing they're willing to live with it, since fighting with financial services companies over swipe fees has been a fact of retail life for a number of years. It has been something of a slog, because the banks have put their backs and their money into fighting against any limitation on their ability to screw over consumers and retailers and charge as much as they want, and make it as opaque a process as possible.

    Both political parties currently are in a situation where there are differing interests working within them toward sometimes opposing goals. In this case, it is the GOP, which has to choose between being the part of Wall Street interests and Main Street interests.

    Published on: May 1, 2017

    The Wall Street Journal has a story about how "supermarkets, in their continuing efforts to win back shoppers who increasingly turn to takeout, restaurants and meal kits, are trying more services that sell chopped vegetables and other short-cuts. They appeal to people’s preference for choosing their own food in person."

    Example: "Hy-Vee ... has begun a meal-preparation program that runs similarly to a book club. A group of five to 12 customers schedule a time to gather in a separate room in the store that may have large working tables, a stove and a dishwasher. Each group member selects one recipe. The group prepares and divides up the meals for everyone to take home."

    Another example: "PriceChopper/Market 32 stores ... has launched a choose-your-own-adventure case in the meat department. Customers start with a sauce, such as lemon-garlic or Marsala mushroom, and select their meat, which is prepared and cut. Then, they are led to prepared and packaged vegetable mixes, such as Brussels sprouts, onion and apple, or squash and onions ... Then, the starch ... Below are recipe cards with preparation suggestions. Customers can select a seasoning mix. The recipes take 15 minutes to prepare, says Mona Golub, a vice president for the supermarket chain, serve four and cost $20 to $25."

    While there is increased competition for share-of-stomach, the Journal writes, supermarkets believe that their "big advantage is that most people still like to shop in person, wooed by smells and textures, squeezing avocados and turning over apples before bagging ... Other grocery stores are eliminating less-frequented center aisles that carry things like dog food and diapers."
    KC's View:
    Maybe it is just me, but I cannot imagine ever wanting to go to a supermarket with a bunch of friends to chop veggies together. (Then again, I'm not a book club guy either. Maybe I'm just anti-social.)

    That said, I like the Price Chopper version a lot more, and have begun to notice when stores provide options such as chopped veggies, whether pre-bagged or chopped on the spot (but by a store employee ... I'm there because I want them to make my life easier and better, not to have them hand me a knife).

    The core of the cultural shift that has taken place is in the observation that traditional center store categories are being shrunk down and replaced by various iterations of meal kits and fresh foods. This is just the beginning of this process, as the purchase - and replenishment - of center store items becomes automated and food stores (at least the ones that want to differentiate themselves and survive) decide to focus on the food part of being a food store, and put an emphasis on the experiential.

    Published on: May 1, 2017

    The Chicago Tribune reports on how Ahold Delhaize-owned Peapod, having survived since 1989 in an e-grocery segment that has seen peaks, valleys and more than a few flameouts, now "is girding for another wave of energized rivals seeking a slice of a market that's expected to be worth $100 billion by 2025, according to industry estimates."

    Competitors such as Amazon Fresh and Instacart, among others, the story says, "will test Peapod's respected operational prowess and its ability to effectively deliver online orders to customers. Peapod also will be pressed to sharpen and boost its marketing efforts as it tries to become known for more than its signature pea green delivery trucks."

    Peapod has evolved, though there might be some reasoned disagreement about whether or not it has kept up with digital disruptors. It has moved from store-pick to a "central, proprietary distribution system designed to more quickly fill and deliver customer orders." The company now has 26 distribution facilities.

    While Peapod - as was reported here on MNB the other day - is investing in a new ad campaign, and it "isn't ruling anything out," the company "stresses it prefers the steadfast selling approach that's worked for so long." And Carrie Bienkowski, chief marketing officer, says that "word of mouth" remains the company's best weapon.
    KC's View:
    Peapod was an early disruptor, and now it has to figure out how to be disruptive yet again ... and so so in a climate with increased an intense competition.

    I don't want to be negative here, but I have to say that alarm bells go off for me whenever someone says something like "we prefer the approach that has worked for so long." I'm always more comfortable when business leaders say, "We're willing to break every rule, challenge every assumption, and try pretty much everything that has as its goal being more relevant to, and indispensable to, our customers."

    Published on: May 1, 2017

    There was a fascinating piece in the New York Times over the weekend about how over-fishing is having a major impact on the world's seafood supply, as well as on economies that depend on fishing for their financial health.

    "Overfishing is depleting oceans across the globe," the story says, "with 90 percent of the world’s fisheries fully exploited or facing collapse, according to the United Nations Food and Agriculture Organization. From Russian king crab fishermen in the west Bering Sea to Mexican ships that poach red snapper off the coast of Florida, unsustainable fishing practices threaten the well-being of millions of people in the developing world who depend on the sea for income and food, experts say.

    "But China, with its enormous population, growing wealth to buy seafood and the world’s largest fleet of deep-sea fishing vessels, is having an outsize impact on the globe’s oceans ... Having depleted the seas close to home, Chinese fishermen are sailing farther to exploit the waters of other countries, their journeys often subsidized by a government more concerned with domestic unemployment and food security than the health of the world’s oceans and the countries that depend on them.

    As I said, this is an intriguing and well-reported piece, and you can read it in its entirety here.
    KC's View:
    One of the things that I kept thinking about when reading the piece is how little influence the US is likely to exercise with China over this issue, mostly because we apparently need them to keep working against the possibility that we could get nuked by North Korea. The viability of the globe's seafood supply probably doesn't seem very important under these circumstances.

    Which means that consumers - and retailers - need to stand up and do something about it, like doing their level best to never, ever buy or eat seafood from China. One of the points that is made in the piece is that Chinese fisherman justify their actions by saying that they are providing food for US consumers ... so we need to choke off that rationale.

    Published on: May 1, 2017

    Online clothing and footwear retailer Zappos "is launching Zappos Adaptive, a curated collection of functional and fashionable products designed to make life easier for those who have challenges getting dressed," reports Marketing Daily.

    According to the story, "The collection features new clothing brands such as 4Ward and Independence Day Clothing, which have items that are fully reversible, soft to the touch, tagless and free of buttons and zippers. Additionally, Zappos Adaptive offers an extensive line of easy-on shoes including slip-on, bungee and cord, hook and loop, diabetic and orthotic friendly options." The move is being supported by "a dedicated customer loyalty team trained to assist customers shopping for products for special needs," the story says, noting that the original incentive was "a single phone call from a customer looking to exchange a pair of shoes for her grandson who was unable to tie his own laces." The inability to provide a viable option led to research that showed that there was "a huge underserved community needing clothing and footwear that is both functional and fashionable.”
    KC's View:
    I just love the notion of a company discovering an underserved community and then doing something about it. I wonder how many of these invisible and underserved communities of people there are out there, and what kind of impact businesses could have simply by opening their eyes and seeing the possibilities and opportunities.

    Published on: May 1, 2017

    • The New York Times reports on how Amazon - likely this year to pass Macy's and become America's biggest seller of apparel - "is exploring the possibility of selling custom-fit clothing, tailored to the more precise measurements of customers, and it has considered acquiring clothing manufacturers to further expand its presence in the category.

    "If there are tipping points in retail — moments when shopping behavior swings decisively in one direction — there’s a strong case to be made that apparel is reaching one now, with broad implications for jobs, malls and shopping districts." While apparel has been slower than some categories to shift to an e-commerce model, the fact remains that Amazon has been throwing resources at the segment, hoping to be able to translate the success that it has had in so many other categories to clothes.

    One of the factors holding some consumers back from shopping for clothes online is that they like to try on items before buying them; retailers selling clothes online have to be prepared for the high number of returns, which affects margins and profitability. Clothes that are tailored to custom-fit shoppers certainly would go a long way in addressing this issue.
    KC's View:

    Published on: May 1, 2017

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

    • The Wall Street Journal reports that in last week's earnings call, Procter & Gamble CFO Jon Moeller "used the phrase 'irresistibly superior' 17 times and 'irresistible superiority' six times," apparently out of the belief that in all of its segments, P&G would be able to build market share with its basic value proposition.

    Analysts listening, however, were confused, which meant that the company had to issue a clarifying statement: "“In a slower growth macro environment, we are establishing an even higher standard of excellence—that of irresistible superiority for our products and packages. Irresistible superiority means our products are so good, consumers don’t ever want to part with them.”

    The problem, of course, is that P&G's products are not so 'irresistibly superior' that they've been able to avoid competitive challenges and market share erosion. Saying it doesn't make it so. Better to have consumers saying it ... which, now that I think about it, suggests to me that maybe Moeller was test-driving a new marketing slogan for the company.

    Yahoo Finance has an observation about Starbucks' earnings call last week - that CEO Kevin Johnson believes that the company is a tech company in addition to being a coffee company, and that its "laser-focus on technology could help insulate it from the woes of retail."

    In fact, the story says, "the word 'mobile' was used 24 times on that call.

    Johnson said at one point that "looking to the future, this is all about how our digital relationships with customers intersect with experiential retail in our stores. We are confident that we’re well on our way to further increasing overall store capacity while delivering enhanced Starbucks experience to our customers.”

    • Weis Markets announced that the company plans to invest $90 million in its growth in 2017.

    Jonathan Weis, chairman/CEO, said that the budget includes money for "14 remodels, a new unit in Brunswick, Md., two fuel centers and the continued expansion of our distribution center in Milton, Pa. We also have seven new stores in the active planning stages and expect most of them to open in 2018."

    The 2017 plans follow a highly active 2016, in which the company "acquired 44 stores and converted them in just three months’ time, growing our store base by more than 20 percent,” he said.
    KC's View:

    Published on: May 1, 2017

    ...will return. I promise.
    KC's View:

    Published on: May 1, 2017

    One of my mother's favorite sayings was, "Patience is a virtue."

    Because she knew me pretty well, I suspect the subtext of that statement would've gone something like this: "If you ever find someone patient enough to put up with you, make sure you grab onto her and don't let her go."

    Which I did. And 34 years ago today, we got married.

    The good news is that Mrs. Content Guy still is patient with me. As I write this, I am 3,000 miles away from her and home, and she doesn't mind. She doesn't even mind that we ended up essentially agreeing to give each other appliances for this anniversary, since the washing machine, dryer and dishwasher all crapped out on us in about a 45-day period.

    She's the best. I'm lucky to have her. And really lucky that she's as patient as she is.
    KC's View: