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: May 10, 2017

    by Kate McMahon

    I recognized the look of disdain. The department store employee glowered when I politely said I was returning a recent online clothing purchase – in its original packaging, tags attached, with a receipt -- to be refunded to my store loyalty credit card. The message was clear: You’re an imposition, not a valued customer.

    Later that day I read about a threatened strike at Bloomingdales' flagship store. Commissioned-sales employees were angry they had to assist customers contemplating or completing an online transactions without any compensation.

    And I thought, they just don’t get it. As the retail industry continues to undergo seismic shifts, everyone from the person in the corner executive suite to those working at checkout needs to focus on a more seamless omnichannel experience for the consumer, whether it takes place online, on a mobile device, in the physical store, or a combination of all three.

    Since the explosion of e-commerce, brick-and-mortar retailers have bellyached about “showrooming” – when consumers comparison shop and research products in a store and then make their purchase online. There has been less discussion of “reverse showrooming” or “webrooming” – where consumers do research online and then complete the transaction in a store. A recent study by the Consumer Technology Association found most shoppers are researching online but are still likely to make an in-store purchase.

    The bellyaching is counterproductive. It doesn't matter whether retailers like it or not. Shoppers like it, and retailers have to adapt. The ones that do, and figure out how to make it work for them, will succeed. The ones that don't will have a much tougher time.

    Amazon, by the way, has been shown to be both the top site for showrooming and webrooming ... in the latter case, people are actually researching products on Amazon and then buying them elsewhere. If Amazon continues to explore a bricks-and-mortar future, it may be in part so it can capture those sales.

    There are plenty of examples of retailers that are embracing the omnichannel opportunity. You can buy anything on LL Bean's website and then return or exchange it at one of its stores, and the folks working there are nothing but cordial and helpful.

    A strong example of omnichannel retailing is the “reserve in store” option offered by select Gap and Banana Republic stores. After perusing availability online, BR consumers can have up to five items held on reserve at the nearest store, no purchase necessary, until the end of the next business day. Your items are set aside in a garment bag, and sales personnel greet you and offer help with sizes and accessories. It’s seamless.

    The bottom line is that it is all about easy math -- when retailer X makes a sale, whether in-store or online, the revenue hits its balance sheet – even if the consumer scoped out retailer A (Amazon) or retailer W (Walmart) in the process. If a person makes a purchase online and then returns it to the store, it actually is an opportunity to cement and nurture the relationship by offering a compelling experience, engaging with the shopper, and maybe even making another sale in the process.

    Bloomingdales and its employees averted a strike, made some changes in salary/commission structure, but there continues to be discord in the ranks and there is more work to be done in remaking the culture to embrace the realities of modern retailing rather than fight it. It is critical to create a culture - and this may well mean fundamentally remaking the ways in which people are compensated, that reflects and responds to shopper priorities.

    Just saying you are an omnichannel retailer doesn't make you one.

    The walls that separate functions within organizations need to be broken down, or walls will end up being built – between the retailer and the customer.

    Comments? As always, send them to me at .
    KC's View:

    Published on: May 10, 2017

    by Kevin Coupe

    This morning's Eye-Opener actually dovetails nicely with Kate McMahon's column, which is about bricks-and-mortar retailers that don't get it - they still think it is about them, not about their shoppers. (Why any retailer would think that is beyond me.)

    Global think tank Fung Global Retail & Technology is saying that "2017's announced store closings are nearly twice that of the same period last year ... Overall, closings have been announced for 3,296 stores for 2017, up 97 percent from the same period last year, the report says, with most of the shuttering closing units falling within the department and specialty store categories."

    This is not to say that it is all doom-and-gloom for the bricks-and-mortar retail sector.

    Because announced bricks-and-mortar store openings are up 20 percent over last year.

    The report says that "value-driven concepts such as discount and fast fashion have been aggressive in expanding their store footprint, despite the difficult retail environment. Categories such as beauty and athleisure are outperforming the market, which is evident in their footprint expansion over the past 15 months."

    Go figure.

    Though I would suggest that in many ways, opening a store is the easy part. Remaining vital and viable requires constant invention and innovation, and a willingness to continually reassess the meaning of consumer relevance.

    'Compete' is a verb.
    KC's View:

    Published on: May 10, 2017

    Amazon yesterday announced the June 28 availability of its new Echo Show, the newest addition to its line of Alexa-powered voice-activated computer assistants, which includes a seven-inch video screen that allows users to view "video flash briefings and YouTube, see music lyrics, security cameras, photos, weather forecasts, to-do and shopping lists, and more."

    In addition to the screen, which also permits users to make video phone calls to anyone with the Alexa app and/or phone calls to anyone with an Alexa-enabled device, the Echo Show has two Dolby speakers and eight microphones.

    The Echo Show comes in black or white, and costs $229.99. Amazon is taking orders now.

    In its story and analysis, TechCrunch writes that "with each device, Amazon has focused on different aspects of how it can utilize its advances in artificial intelligence to further advance what you can expect from its hardware ... there are so many more things that this can lead to: for example, it’s just a small leap between the small screen of today’s device, and a larger console that can replace the main TV in the room. Considering Amazon’s other efforts in media, specifically with Prime Video and its Fire Stick to enable on-demand channels and Amazon services, you can see (literally and figuratively) where this might be going.

    "What’s also interesting, for the Amazon nerds among you, is to see how Amazon pieces all of its products and strategies together over months and years, pulling things from here and there and everywhere. As we uncovered, Amazon last year quietly acquired a video conferencing startup called Biba. Some of that tech has made its way into AWS’s enterprise services, but now can you can see how it may also be very much flowing into Amazon’s consumer plays, too."

    In its story this morning, the New York Times writes that "in a move that could have broader impact, Amazon also said it would release a free software update this week that brings voice-calling features to existing Echo devices ... In a way, the new communications functions turn the speaker into something like a traditional landline telephone, which many people have given up in favor of smartphones. Rather than pulling a phone out of their pockets, people will be able to simply command their Echoes to call someone.

    "The goal is to make the Echo, and Alexa, even more of a fixture inside people’s homes — a system that can help you shop online, control your home’s temperature and, now, converse. And it allows Amazon to once again chart a path ahead of others with how it is using the speaker."

    KC's View:
    I think it is worth pointing out that while Walmart and Target try to figure out automatic replenishment so they can compete successfully with Amazon's Subscribe and Save, Amazon keeps moving forward, relentlessly, pressing its advantages and finding new technological wrinkles that it can exploit. Because among all the other functions that the Echo Show has, it also allows people to buy stuff more easily from Amazon.

    I have no idea if this thing will work, though I suspect it will. What I do know is that Amazon will learn immense amounts from it, and that the Echo Show is just one more plank in a platform that grows larger and more impressive.

    I've ordered mine.

    Published on: May 10, 2017

    Market Force Information is out with an assessment of the nation's grocery stores, concluding after a survey of more than 12,700 consumers that Publix and Wegmans are tied as America's favorite supermarkets, followed by Trader Joe's and H-E-B.

    According to the survey, "This is the second consecutive year that Wegmans has held the top spot in the annual study, after unseating long-running favorite Trader Joe’s in 2016.

    "Publix, which ranked second for the past four years, earned a first-place tie with Wegmans, with each scoring 77% on Market Force’s Customer Loyalty Index. Trader Joe’s narrowly missed the lead spot with 76%, and H-E-B made the top three for the first time with 69% - a 10% increase from 2016. ALDI and Harris Teeter rounded out the top five with 68% and 66%, respectively."

    The survey goes on: "What sets one grocer apart from the others in shoppers’ minds? For one, being able to find the items they want, a category where Publix was a clear leader. Publix was also found to have the cleanest stores and fastest checkout speeds. Wegmans ranked highest for its specialty department service, and a close second for item availability. Trader Joe’s was found to have the most courteous cashiers. ALDI once again led for value, followed by WinCo Foods and Costco. Harris Teeter, Hy-Vee, ALDI and H-E-B all fared well in the rankings, while Walmart landed at the bottom in all categories but one."

    Two other interesting observations from the survey:

    • "The use of click-and-collect has more than doubled since 2016, with 9% saying they’ve tried it, compared to 4% in 2016. Of those, 78% were satisfied or very satisfied with the experience. Most click-and-collect shoppers use the service at Walmart, followed by Kroger, Sam’s Club and Harris Teeter. Twenty-six percent are frequent users, taking advantage of click-and-collect at least monthly.

    "Home delivery services are also growing in popularity – 18% said they’ve used grocery home delivery, compared to 15% in 2016. Most are using the service through general online retailers such as Amazon and Jet. However, one-fifth were less than satisfied with the experience, leaving ample room for improvement."

    • "Market Force found that 11% of consumers studied had tried a meal kit delivery service at least once, however, nearly half (47%) were less than satisfied with the experience. When asked why they opted for a meal delivery service, 51% indicated they were looking to add variety to their meal planning. Others top reasons were to have a fun experience, try new ingredients, save time and reduce decision-making.

    "Blue Apron is the most popular meal kit service, with 39% indicating they’ve tried it, HelloFresh was second with 30% and Home Chef was third with 10%. However, 76% who tried a meal delivery service have stopped using it, primarily because of poor value, but also portion size and prep time. Home Chef has the highest satisfaction rating and the lowest customer churn."
    KC's View:
    As usual, I am a little leery about such conclusions, if only because people sometimes will conflate "favorite" with "best." This is not to suggest that Wegmans and Publix are not wonderful supermarkets, just that surveys such as these tend to be weighted toward stores with large footprints in highly populated areas.

    And so, retailers such as Dorothy Lane Markets, Lunds & Byerly's, Westborn Market, Zupans, and Metropolitan Markets do terrific and often unparalleled jobs bringing food to their shoppers, but don't show up on such surveys.

    By the way ... it is retailers such as these that make me believe in the future of bricks-and-mortar ... because they give people a reason to go to the store by offering compelling, illuminating and fulfilling experiences.

    Published on: May 10, 2017

    The Wyndham hotel company announced this week that it is "launching a new service that gives guests easy access to grocery delivery, bringing groceries straight to guests' doors with the help of Instacart and Peapod."

    The company says that the service, which is being tested at eight of its Hawthorn Suites properties in various markets, is said to be "the brand's newest offering developed to help long-term guests maintain their routines when away from home. It's the latest addition to Homemade @ Hawthorn, the brand's in-room, chef-driven cooking program designed for hotel living serving up seasonal, home-cooked recipes from award-winning chefs which can be easily prepared in a fully equipped in-suite kitchen. With just a few clicks ... guests at the pilot hotels can easily find and order all of the ingredients for their favorite Homemade @ Hawthorn recipe, or their most-wanted grocery items, and have them delivered straight to their hotel."
    KC's View:
    What this suggests to me is that there is an opportunity here for supermarkets to create relationships with hotel chains - especially those like Extended Stay and Residence Inn that cater to long-term guests. These folks are perfect targets for grocery delivery programs, and what Wyndham is doing is establishing a funnel that will benefit all the participants.

    Published on: May 10, 2017

    In advance of the company's annual meeting today in Chicago, Sears Holdings chairman/CEO Edward Lampert did an interview with the Chicago Tribune in which he said that he remains committed to turning the company around, despite the fact that it seems to have been heading relentlessly toward irrelevance and collapse over the past few years.

    Among his comments:

    • "Preparing the company for this day and age is something we've been working on for the last dozen years. The challenge for us internally as well as externally is to be able to demonstrate to the world that what we've built is something that can stand up against the best competition that's out there."

    • "I feel like we're ahead of J.C. Penney, we're ahead of Macy's, we're ahead of Target, in some aspects of where the world is going. Some of them have greater financial resources than us or certain advantages in certain categories. Clearly we have our challenges. Every time people use the word bankruptcy, somebody who reads that doesn't get past that word. It makes it very unfair for us, and it's a very uneven playing field for us."

    • "We're fighting like hell to change the way people do business with us. And my view is, we're the customer. If you're a vendor, and want to do business with us, then you have to treat us like a customer, you don't treat us like a pariah."

    • "We have as much time as our vendors and our lenders and our shareholders are willing to give us. It's up to us to basically demonstrate to people that we can drive results to get people behind us. We're trying to be proactive with our vendors, we're trying to be proactive with our members, with our employees, associates, etc., to explain that the reality is a lot better than the perception. The reality needs to be better than it is for us to really demonstrate to people that the transition is starting to take hold."
    KC's View:
    The thing about the Lampert interview is the degree to which he seems willing to blame pretty much everyone else - the media for paying too much attention to the company's travails, vendors for mistreating the company, the recession for creating economic issues, and the dog for eating his homework.

    What he doesn't take responsibility for is the fact that the stores are lousy, the company's flagship brands have had to be sold off, and that Sears and Kmart might as well be selling buggy whips as most of what they actually are selling.

    If he really thinks that that "we've built ... something that can stand up against the best competition that's out there," he's delusional.

    Dead company walking.

    Published on: May 10, 2017

    Bloomberg reports that Walmart is preparing to write a $300 million check to settle charges that its employees bribed officials in Mexico, India, and China as a way of greasing the wheels of expansion in those markets. The settlement would require a guilty plea by Walmart.

    The story notes that "the deal, which has yet to be finalized, would be a significant concession for the U.S. government. The Justice Department and Securities Exchange Commission prosecutors sought at least twice that amount, but was rebuffed by the retail chain in October 2016, according to a Bloomberg report."
    KC's View:

    Published on: May 10, 2017

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

    Essential Retail reports that Tesco is working with Google Home "to enable its customers to add products to their home shopping basket by using their voice ... Shoppers simply ask Google Home to buy an item and it is added to their online shopping basket."

    This functionality, the story says, "is made possible by the IFTTT (If This Then That) platform that connects Google Assistant with a customer's Tesco home shopping account. Tesco has been using the channel to enable customers to automatically put things in their basket depending on certain requirements being met. One of the most popular has been adding a particular product when it drops below a defined price."

    I love this last little bit about ordering a product when it hits a certain price point ... I haven't seen that done elsewhere, but think it is a very interesting idea.
    KC's View:

    Published on: May 10, 2017

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

    • In his commencement speech at Arizona State University, Howard Schultz, chairman of Starbucks, suggested that there is one word that they need to keep in their minds and hearts - "Ubuntu."

    "Ubuntu," he said is a South African word that means "I am because of you."

    Schultz said in his speech that "not every business decision is an economic one and success is not an entitlement, it has to be earned and earned everyday through humility."

    I am a Starbucks fan and customer, though I've been known from time to time to be less than completely persuaded about the decisions they make. But I have no reason to doubt Schultz's sincerity on this, and I agree with him - business should be about more than just business, and the greatest business leaders know that.

    Bloomberg reports that Walgreens Boots Alliance has taken steps "to force U.S. antitrust officials to decide within two months whether to approve its proposed takeover of rival pharmacy chain Rite Aid Corp. The companies have notified the Federal Trade Commission that they have complied with the agency's request for information related to the deal, a move that triggers a 60-day deadline for the commission to clear the merger or sue to block it ... Walgreens and Rite Aid have been grappling with the FTC for months in an attempt to resolve the agency's concerns that the merger of the No. 2 and No. 3 pharmacy chains could undermine competition."

    • The Wall Street Journal writes that the new CEO of Coca-Cola, James Quincey, "wants the company to shake off a culture of cautiousness that has dogged the soda giant for more than a century," a problem that has been nicknamed "New Coke Syndrome."

    While Quincey concedes that messing around with Coke's flagship beverage is problematic, with smaller brands and opportunities, “If we’re not making mistakes, we’re not trying hard enough.”

    Quincey adds, "The trap you fall into as a big company is you start… looking at the world through the lens of your existing business: How can I leverage what I’ve got to get more? But the way to avoid getting disrupted is to start with the consumer and say: What’s actually happening out there?”

    Reuters reports that "Bumble Bee Foods LLC has agreed to plead guilty to one count of fixing the prices of canned tuna sold in the United States and to pay a criminal fine of $25 million, the Justice Department said ... In its complaint, the Justice Department said that executives from Bumble Bee and unnamed other companies held 'discussions and attended meetings' from 2011 to 2013 'to fix, raise, and maintain the prices of packaged seafood'."
    KC's View:

    Published on: May 10, 2017

    Got the following email from MNB reader Carl Jorgensen about Michael Sansolo's column this week:

    I am only occasionally moved to respond to things I read online, but Michael's terrific essay on visiting the laundromat was just the nudge I needed.

    I live in Stamford, CT, home to a very diverse population: from all over Latin America, the Caribbean, Russia, India, Pakistan, China, etc., etc. Sometimes, walking downtown it’s like the United Nations; I’ll hear at least a half-dozen languages in the space of one block.

    As the businesses catering to these various groups proliferate in the area, my daughter and I enjoy taking our chances and just going in, looking at what’s on offer, and talking to the owners and patrons, just getting a feeling for what their daily lives are like.

    I dearly wish that the exciting diversity and cultural mosaic that we live in the midst of could be experienced by those who fear immigrants and want to somehow go back to an imagined world of the 50s. We were all immigrants at some point, and can benefit by seeing our own heritage repeated in the experiences of today’s new arrivals.

    On another subject, from MNB fave Glen Terbeek:

    It is interesting to see the recent interest in “meal kits”. At least 25 years ago Ukrops offered the “Dinner for Two” meal kits in their stores. If I remember correctly they offered 2-3 options a day and they published the schedule for the offerings in advance for the convenience of their shoppers. It was well accepted. Is the recent interest due to “Disruptors” from outside the industry, like Blue Apron, challenging the old way of doing business?

    A couple of interesting points re: meal kits. First, the price of the kit is based on the value added of the “solution”, not the aggregate price of each item in the kit. And second, the shopper doesn’t care what brand is included in the kit (including private label) as long as they like the solution when served.

    Meal kits are just another way that supermarkets need to compete in the broader food industry by adding value above and beyond price and selection. More and more the shopper is asking “what’s for dinner?", versus "where should I do my weekly shopping this week?"

    Yesterday we had a story about the new 365 by Whole Foods that opened in Austin, Texas, and a local blogger who had a problem with too-big batches of cilantro (an employee said that this was the way the supplier provided it...which seemed to be more important than how the customer wanted it) and one kind of tortillas (flour, from California).

    I commented, in part:

    These two anecdotes reflect potentially serious problems.

    Whole Foods always has made a big deal about people who are living the life, not just doing a job. If you have someone who is almost curt in the treatment of customers on opening day, that's a problem.

    And while I may be wrong about this, it seems to me that selling California tortillas in a Texas store - especially in a format like 365 - is almost unforgivable. There is an enormous difference between fresh/local tortillas and the packaged variety ... and one of the reasons I go to Stew Leonard's (in Connecticut, hardly a bastion for great ethnic food) is because they make fresh tortillas on the premises.

    To be fair, I haven't seen this new Whole Foods ... but I've seen the other three, and the whole affair still seems flawed to me. Maybe not fatally flawed, but with problems that need to be addressed.

    MNB reader Robert Dyer responded:

    What struck me about this report from a customer was the obvious miss on aligning the store assortment to the demographics and geographics.

    When I see such a basic miss, I usually write it off to a “kindergarten” level of expertise being employed against these stores. As this example is from Texas, a very local brand conscious and regional food focused region of the country, I am amazed that a larger set of options for cilantro and local tortillas is not available.  Believe me, HEB has got this right in every one of their stores.  From a tortilla perspective, my experience running stores in California in Hispanic dominated market areas, local tortillas are going to be the only thing that will sell.  In one of the stores that I ran we had a permanent front end cap display, four feet deep of tortillas, which was 80% merchandised with the local tortilleria brand and 20% with national brands.  At the end of each day, the local tortilleria brand was sold out and the national brand tortillas were still sitting on the shelf …

    From another reader:

    Even many Krogers in Texas offer fresh, in-store made tortillas.  Someone who got it right that didn’t start in Texas.  We take our tortilla’s seriously as Mexican food is a staple meal for MANY households here.
    KC's View: