business news in context, analysis with attitude

Published on: May 23, 2017

by Michael Sansolo

The one-time lead singer of a prominent 1980s heavy metal band shares my birthday, a fact that you probably never needed or cared to know. But if you were looking at raw data, you’d see that he and I are both aging Baby Boomers, with similar ethnic backgrounds and the same Zodiac sign.

And, frankly, you’d know nothing because I can’t imagine there’s anything in our lives that bears much similarity. Sure, it’s likely we both watched "Lassie" and "Gunsmoke" as kids, listened to countless Beatles songs, and experienced other key elements of the Boomer generation, but that tells you very little about us as people, consumers and anything else.

The insignificance of generalizations came up for me last week, while I was moderating a panel at the annual Category Management Association (CMA) conference. I asked one panelist, Kerrie Lopez of Jet.com, how the large crowd of retailers, manufacturers and technology providers could collectively improve in the near future. She gave a two-part answer.

First, she said, we need to clean up data, especially around product attributes. Her point was that any company engaged in e-commerce (and that’s pretty much everyone these days) needs product dimensions - volume and size - to be correct every time, but the system still lags.

But more importantly, she said, we all need to get over generalizations about everyone. Lopez explained that she is a Millennial and she’s tired of the clichés about her age cohort - you know, the lazy, entitled, give-me-a-trophy generation. She has a really good point.

Lopez quickly detailed how much difference there is in the lives and work ethics of her circle of friends and even between her and her husband. None of that should surprise anyone because we know we’re all unique, but Lopez had the microphone and a point. Far too many businesses and business people are generalizing when it comes to the Millennial generation and in turn aren’t getting it.

Not surprisingly, a second panelist - a Gen Xer - followed up the point with the same observation of his birth cohort.

Retail, as we discuss here at MNB nearly constantly, is currently in a storm of turmoil. Competition, consumer demands and technology, among other forces, are changing the very essence of shopping behavior. More than ever, it seems, businesses need to both understand how to serve customers and recognize all the assorted trigger points that might or might not work.

But none of that can happen if we make or rely on generalizations. It’s why the CMA meeting was so interesting, as participants from various trades shared notes and ideas on how to better use data to align with those changing customer needs. More than ever, successful marketing will rely on precision and understanding the unique triggers for each shopper. Generalizations just won’t cut it.

The last word on generalizations goes to Michael Caine’s character in Austin Powers’ Goldmember, who remarked that he hated two kinds of people: “Those who are intolerant of other people’s cultures and the Dutch.”


Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.

Published on: May 23, 2017

by Kevin Coupe

Yesterday I read a lovely little blog posting about shopping in Paris that I thought I'd share, in part because it makes a good point about retailing, and in part because I have a sentimental attachment to the author.

The blog is called Parisian On Purpose, and it tells the story of how the author wandered into a "little boutique on the Rue Boulard in the 14th arrondissement," looking for something that seemed typically Parisian that he could bring home with him to Manhattan. The shopkeeper, however, told him that her goal was to create a store that would evoke - you guessed it - Manhattan.

And yet...

"The recollection of place, or the evocation of a visit or voyage, is more important for the person who recollects or evokes than for the person who sees what’s evoked. You never really get what’s meant by what you see, or what others want you to see. It was enough for this boutique owner to think that she had created something that resembled what she’d seen in New York for it to be so for her. It certainly wasn’t for me to tell her otherwise – her impressions and memories weren’t mine. And of course I didn’t tell her that I had entered her store because I’d wanted to purchase a little something that would remind me of Paris."

The blog posting is actually about the concept of home and the notion of new beginnings, but I thought the observation about retail was an important one - that what retailers mean is not necessarily what shoppers see. While it is critical for marketers to have a vision, it is equally important to listen, and to be nimble enough to adjust when reality does not synch with expectations. (In its own way, that's what Amazon does when its home page appears differently for every customer - it may be mechanized and driven by algorithms, but it is highly personalized.)

The sentimental part of the blog posting was that it was written by a fellow named Bob Hughes, an accomplished novelist (and someone far more literate than I) who also happens to be the guy who was my first editor when I joined Supermarket Business magazine back in 1984 - my first job covering the food business. (I figured I'd do it for six months or so and then go write about something else. Go figure.)

Bob was a good guy and an expert editor - and he also happens to be the person who taught me how to make risotto, which remains one of my favorite dishes. I've lost touch with him over the years, and so I enjoyed reading about his adventures in Paris ... especially because they connected with the subject - retailing - that we wrote about for the same magazine more than 30 years ago.

Enjoy. I found it to be an Eye-Opener.

Published on: May 23, 2017

The Associated Press has an interview with Boxed co-founder and CEO Chieh Huang, who has created a business that allows users to order bulk products similar to those they'd buy at a warehouse store, get two-day delivery (free for orders over $49, which virtually all are), and avoid the lines and inconvenience they might find at Costco or Sam's Club.

"We are not the everything store," he tells the AP. "There are so many folks trying to be the everything store ... trying to be Amazon. We want nothing to do with that. Amazon is still a great service, but they don't service the folks that want to stock up well. It's 1,500 (items). It started off as 200. We won't carry every brand. But the brands we carry and the items we carry we have a commitment to the customer. We need to be very competitive. Online, it will be a price leader or very, very competitive online. The consumer orders on average 10 items from us per shop. When you take that basket as a whole, it will be the cheapest basket."

Published on: May 23, 2017

Fast Company has a fascinating piece about the impact of automation on retail. An excerpt:

"As retailers install self-checkout systems, proximity beacons that flash offers to shoppers’ phones, and invest in robots that replenish shelves, they’re likely to need fewer and fewer workers in the coming decade. A new analysis finds that up to 7.5 million jobs are at risk in U.S. retail, with women and rural areas particularly affected."

The argument is that a combination of retail productivity stagnation and increased minimum wage laws - not to mention pressure from investors to show greater returns on lower costs - is creating an almost impossible-to-resist shift toward automation at all levels of retail.

You can read the entire story here.

Published on: May 23, 2017

USA Today writes this morning that "Sears Holdings, which wasn't shy when it announced at the start of the year that it is closing 150 underperforming stores, has quietly added at least 30 more to the list."

The 12 Sears stores and 18 Kmarts slated to close are located in markets from California to Florida, and most will close in July.

The company had said it would close 150 stores, then added a dozen to that list last month. This group of 30 appears to be a new batch slated for closure.

Sears now has fewer than 1,500 stores, down from 2,073 five years ago.

The story goes on: "Sears’ financial difficulties are particularly deep. It hasn’t turned a profit since 2010, and it reported more than $2.2 billion in losses last year. To turn the company around, it has been closing stores, often selling off the real estate, as well as borrowing money and putting some of its vaunted brands up for sale."

Published on: May 23, 2017

The Wall Street Journal has a wonderful story about how several years ago, Amazon CEO Jeff Bezos had a brainstorm - "that Amazon should offer everyone near its headquarters—not just employees—healthy, eco-friendly snacks as a public service. After considering oranges, Amazon picked bananas, and opened its first Community Banana Stand in late 2015. It has since expanded to two stands on its corporate campus, which sprawls across several blocks in downtown Seattle, and says it has given out more than 1.7 million free bananas."

The initiative has created some level of disruption - local business seeing sales drop for their banana-based products, consumers expecting free bananas at local cafes, and patrons who sometimes bring their free bananas into restaurants where they are eating lunch.

It also is something of a cultural shift at Amazon, which "has traditionally been more frugal with its perks than other tech companies, which offer dry cleaning, haircuts, cold-brew coffee, nap pods and in-house yoga classes, among other things."

"'Banistas' oversee the wooden cart operation, stacking up a selection of fruit, which range from green to bright yellow, as fast as passersby can take them. They move about 8,000 a day, Monday through Friday, at the two stands, according to Amazon ... Most visitors take two. Others take close to a dozen, claiming they have hungry co-workers—never, of course, that they hanker to bake banana bread after work. Some post photos on Instagram feeding the bananas to their dogs."

Published on: May 23, 2017

The Washington Post reports that Wegmans has finally identified a location where it will open an urban store in Washington, DC - a portion of Fannie Mae headquarters on Wisconsin Avenue NW, across from the posh and pricey Quaker-owned and operated K-12 Sidwell Friends School. (Tuition is $40,000 a year, but that includes a hot lunch.)

Fannie Mae is expected to move out of the space next year, and Wegmans would likely open an 80,000 square foot store - one of the smallest in its fleet - by 2022.

"The D.C. location will be one of the company’s smallest, and most urban, outposts," the Post writes. "The supermarket chain, known for its sprawling stores, has in recent years begun planning more city-friendly alternatives. A Brooklyn location, Wegmans’s first in New York City, is expected to open next year."

Wegmans currently operates 92 stores.

Published on: May 23, 2017

• The Financial Times reports that "Amazon will offer live television channels on its video platform for the first time in Europe as the US technology group steps up its push into broadcasting and ramps up its competition with traditional networks."

Here's the deal: In the UK and Germany, Amazon Prime subscribers will be able to pay an extra fee to access live and on-demand programming from networks that include Discovery and ITV.

The story notes that "while Amazon customers in North America have been able to watch live networks such as Showtime, Starz and HBO for some time, the deals with Discovery, Eurosport and ITV represent the first time European customers will be able to view traditional television networks through the Prime portal."

Amazon has been spending billions of dollars a year on exclusive content such as "Bosch" and "The Man In The High Castle," as well as licensing deals like the one it recently signed with the NFL for streaming rights to Thursday night football games.

Published on: May 23, 2017

• Reuters reports that Target CEO Brian Cornell will testify today at a US House of Representatives hearing, arguing against a Republican-backed proposal that would create a border adjustment tax on imported products (and also offering tax credit on exports). The Cornell position is that such a tax would result in increased prices and thus hurt consumers.

The story says that Cornell may be the only person testifying who opposes a border adjustment tax. Other executives scheduled to testify include Juan Luciana, president and CEO of agribusiness Archer Daniels Midland, and former Walmart CEO William Simon, who have supported the imposition of such a tax.

The Reuters piece says that "House Speaker Paul Ryan argues the proposed border tax, which is estimated to garner $1 trillion, will not affect prices and will allow rate cuts for businesses while not creating deficits, but retailers warn that it could raise consumer prices as much as 15 percent ... The outlook for passage of the border tax - which drew staunch opposition from retailers - remains perilous, especially as key Senate Republicans and President Donald Trump have refused to endorse it."

The hearing is seen as an attempt to jump start momentum in favor of such a tax.

Published on: May 23, 2017

• It is being reported at this hour that Sir Roger Moore, who gained television stardom as the title character on "The Saint" and then film fame as James Bond in seven films about British secret agent 007, has passed away from cancer at age 89.

Published on: May 23, 2017

Yesterday, MNB reported that the New York City Board of Health has informed supermarkets and large chain retailers there that they must begin posting calorie counts for prepared foods, as well as making additional nutritional information available upon request.

The rules apply to any retailer with a minimum of 15 locations nationwide. The Mayor Bill de Blasio administration said that the new regulations are designed to help New Yorkers know about their food, giving them the option of avoid foods that have little nutritional value and lead to a variety of chronic diseases.

MNB reader Rich Heiland wrote:

Just got back from a week in Parker, CO (Denver) for the middle grandson's graduation.

We ate supper at a Brickhouse Tavern which had all the calories posted on the menu. We pointed out to the waiter that there was no meal on there, except for soup and a couple of things, that we could eat without burning two-thirds our daily allotment.

"We just put out these menus and we were shocked," he said. "We work here and had no idea. Since we did it people have been dropping their jaws. It's been kind of interesting and when they say 'your stuff is fattening' all I can say is 'everybody's stuff is fattening.'

I ended up getting a small pepperoni-mushroom pizza at 1,200 calories. Believe it or not it was one of the lowest calorie counts on the menu.

The next night at a Chili's in Abilene, TX we had the same experience. All I could think as I ordered my quesadillas was "what have I been doing to myself over my 70 years?" Suicide by dining?

No question. Hard truths sometimes are the result when transparency is the rule.

Another MNB reader wrote:

There's an old saying that "You can't legislate morality".  Unfortunately, I also believe it's true, that neither can you legislate health. All the menu boards and caloric listings etc. will only effect a minimum of people.  Will some pick a salad over a Big Mac, or a Tea over a sugary cola?  Sure, but not consistently. So I'm of the belief that the labeling "cure" is disproportionately harmful, with respect to the "disease".  If labeling worked, we'd be a smoke free country, but even with all the negativity associated with it, people still do it.  I just can't help but think there has to be better things for our elected officials to spend their time on.  

Yes, I live in the "we don't matter, fly over zone", and I just shake my head at the coastal communities sometimes.  One day to comply?  Seriously?  What are they going to do shut down all the restaurants in NYC?  I've been doing it for 40 years, but  I just can't see all of Wall Street  Brown Bagging it for even a week.

I think this has been in the planning stages for a long time, and businesses have had plenty of notice. But you're right, in the interest of comity they could've given them more time.

To me, legislating health would mean forcing people to eat one thing or another. This is about providing people with sufficient information so they can make informed decisions. You can't force them to make intelligent decisions ... but you can provide information.

I may be wrong, but I think there's a difference.

One of the things I wrote yesterday was:

As I've said before, if retailers found a menu item that they could legitimately describe on menu boards as making people richer, thinner, better looking and more sexually appealing, they'd damn the costs and find a way to get that info onto menu boards.

Prompting this email:

You're right.  If the return looks acceptable, they'll make the investment.  As a shareholder, isn't that the way you think it should work?

If the argument is that a business is within its rights to keep information from the consumer that might hurt the bottom line .... no, I wouldn't agree.

Yesterday's story also prompted one MNB reader to write:

If you ever wonder why cities like NY and Los Angeles are losing people by the thousands, you need to look no further than idiotic decisions like these. The very same people they are trying to help are being screwed by these new regulations. Those with the ability to move out of these situations usually do.

The other thing I have noticed is that these Mayors and Governors actually think they are leading the country and the world down the path of righteousness. The reason for this is they are surrounded by ass kissers that do nothing but drool over every ridiculous idea they come up with. The only problem is that everyone outside of their circle are laughing. These very same laughing people are the ones that elected Trump.

Let's address the first assertion first.

You'd have a point ... if you were accurate.

Let me quote from the website of the New York City Department of City Planning:

The U.S. Census Bureau has estimated New York City’s population at 8,537,673, as of July 2016. This represented an increase of 362,500 residents (or 4.4 percent) over the April 2010 decennial census count of 8,175,133. The city has not witnessed such a robust pace of growth in over a half-century. Population growth has been fueled by the continued surplus of births over deaths, partly due to record high life expectancy, which has been partly offset by net outflows from the city.

Each of the city’s five boroughs registered gains in population. The Bronx saw the largest increase, up 5.1 percent, followed by Brooklyn (5.0 percent), Queens (4.6 percent), and Manhattan (3.6 percent); Staten Island showed the smallest gain (1.6 percent) over the 75-month period. The increase for the Bronx brings it close to its historical high, achieved in 1970, when the population of the borough was at 1.472 million.

So New York City is growing. Perhaps this won't be the case next year, when people all over the city flee to parts of the country that don't have such labeling regulations. Then again, maybe they won't ... since many of those parts of the country also don't have everything else that New York City has to offer.

As for Los Angeles, let me quote from a recent story in LA Weekly:

In this post-recession world, Los Angeles appears to be booming. Jobs are on the comeback. The skyline is changing. And the population is swelling.

The latest population estimates from the California Department of Finance conclude that the county grew by 43,758 between mid-2015 and mid-2016. That's only a 0.43 percent increase. But the megalopolis we call Southern California, including Los Angeles, Riverside, San Diego, Orange and San Bernardino counties, accounted for nearly half the state's growth during that time — and ranked one through five in total population gains, respectively — the department found.

While those counties posted the highest numerical gains, rural counties such as Yolo (nearly 2 percent), San Joaquin (1.56 percent) and Placer (1.44 percent) posted the highest increases as percentages of their mid-2015 populations, according to the state estimates ... L.A. County's population is now 10,229,245. That means that Angelenos account for more than one in four Californians, according to the department.

Now, I wondered if this was fake news, so I checked the Los Angeles County website, and found that the last time there was a population decrease there was 2007.

Then I checked the USPopulation2017 website, and found that over the past five years, the city of Los Angeles has seen population growth:

2012 –3.85 Million
2013 –3.88 Million
2014 –3.90 Million
2015 –3.94 Million
2016 – 3.99 Million

Experts estimate the city of Los Angeles will have a population of 4.018 million in 2017 ... another year of growth.

Now, perhaps this will reverse itself, as people take flight out of Los Angeles because they're tired of idiotic decisions and being screwed by new regulations ... not to mention the sunshine, cultural diversity, business growth (pretty decent of late) and one of the best food cultures in the country. But maybe they won't.

(I admit here that I have a bias. I was born in New York City. I've lived in Los Angeles. I love both places and am temperamentally a coastal person.)

I do think you're partially right about these mayors and governors thinking that they "are leading the country and the world," though they probably wouldn't describe it as "down the path of righteousness." (Though that isn't so bad, since the dictionary definition of righteousness is "the quality of being morally right or justifiable.") I suspect they'd describe it as trying to achieve a scrupulous and transparent system that has enough integrity to provide information, options and even help for those who need it.

By the way ... do you think maybe your email has just a tinge of self-righteousness?

Now, we can have a nuanced and sophisticated argument about where the tipping point is. Some folks will argue that government has no business even getting involved in this stuff, and others will argue the other way. My feeling is that it is worth the time and trouble to find a balance that serves both citizen and business, because neither really can survive without the other. However, "balance" seems to be a dirty word these days ... just like "compromise."

As for the idea that the mayors of New York and Los Angeles, as well as the governors of New York and California, are enabled to do what they do only because they "are surrounded by ass kissers that do nothing but drool over every ridiculous idea they come up with" ... well, I think that there is enough ass-kissing to go around, on both sides of the political spectrum and at every level of government. My general feeling is that the higher up you get, the more puckering up there is.

Finally, regarding your concluding phrase:

"The only problem is that everyone outside of their circle are laughing. These very same laughing people are the ones that elected Trump."

Maybe they are laughing. But that strikes me as foolish. If you spend as much time around the country as I do, it doesn't take a presidential election - not to mention an Electoral College vs. popular vote debate - to convince you that we live in a deeply polarized country.

I'm not sure that anything about our country right now is a laughing matter, though there are plenty of late night comedians out there who might disagree. But I think we'd all be a little better off if perhaps we cut down a bit on the condescension and righteousness and maybe listened to the other side a bit, assuming that people who think differently than us about issues still have the best interests of the nation at heart.

Just a thought.