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    Published on: August 11, 2017

    by Kevin Coupe

    This week, as it happens, is the last week of my annual summer adjunctivity at Portland State University (PSU). This is the sixth year that I've had the privilege and pleasure of spending much of my summer in Oregon, where I get to enjoy great food, beer and wine, travel around the Pacific Northwest, and team-teach (with the great and patient Tom Gillpatrick) a summer class in retail/CPG marketing. I head home to Connecticut tomorrow.

    I have commented here before that I often learn as much from our students as they learn from me. That is, to be honest, part of the attraction; I get to spend a fair number of hours asking them questions, listening to their points of view, and finding out what their passions and priorities are. And, I get to share mine with them; one that I spend a lot of time talking about is the value of clear, concise writing and how it can both create and reflect clear thinking. (My dream is to someday teach a writing class to business students. It wouldn't be about business writing, but just basic writing, and they'd read the works of Elmore Leonard, Raymond Chandler and Ernest Hemingway to see what I'm talking about.)

    I also get to learn from the guests who visit us in class. This is no small thing. Over the years, we have been visited by some remarkable people who have been willing to share their time and insights with our students. One of the rules of the class is that everything our guests say is off the record; this is kind of important considering my day job. I haven't talked much about our guests in the past, but this year I reached out to them to ask if I could at least mention on MNB that they had contributed their time and energies to our summer 2017 class.

    They all said yes, so here, in alphabetical order, are this summer's guests:

    • Mike Burrington of Ideoclick (and formerly of Amazon Fresh)
    • Karen Caplan, CEO of Frieda's Specialty Produce
    • Greg McNiff, president of Albertsons/Safeway's Portland Division
    • Tom Murphy, Global Retail & Consumer Products Industry Lead at North Highland
    • Leslie Sarasin, president/CEO of the Food Marketing Institute (FMI)
    • Lisa Sedlar, founder/CEO of Green Zebra
    • Jason J. Strobbe, SVP-Sales & Marketing, Truett-Hurst

    I want to thank them publicly for their generosity of spirit and willingness to go out of their way to contribute to the education of our students. (Some, like Greg and Lisa, are local. But Mike and Tom came from Seattle, Karen came from Los Angeles, and Leslie came fromWashington, DC. This is what Joe Biden would call a "BFD.")

    And I would use this moment to suggest to you that whenever any school or teacher calls, it is worth it to try to find time in your schedule to spend some time in the classroom. In fact, you can even volunteer. Trust me ... you'll get at least much out of the experience as you put into it. (I'm planning on being back at PSU next summer, so, to be honest, this is slightly self-serving.)

    I think you'll find the experience to be an Eye-Opener. I always have.
    KC's View:

    Published on: August 11, 2017

    The Wall Street Journal has a piece speculating about how deeply Amazon will integrate Whole Foods into its own operations once the $13.7 billion acquisition is completed.

    An excerpt:

    “Amazon’s options with Whole Foods range from leaving the grocer essentially as a standalone to giving it an overhaul. While the transaction is expected to close this year, Amazon is typically deliberate when it comes to establishing an integration plan, and it could take several months for it to become clear, according to former Amazon employees and people familiar with its acquisition strategy.”

    The Journal goes on to write that “a look back at Amazon’s track record shows it is largely hands-off with its acquisitions, except in some cases where it has bought a company for scale or to remove a rival. Their $1.2 billion acquisition of Zappos in 2009 largely left the online shoe seller autonomous, in part to preserve Zappos’ relationship with brands and customers. The two companies established operating guidelines and limited integration to ‘must-haves’.”

    The story is available in full here.
    KC's View:

    Published on: August 11, 2017

    Safeway this week has lost an appeal to the US Court of Appeals for the 9th Circuit in which it sought to have overturned the result of a class action suit in which it was successfully charged that the retailer overcharged online customers for their deliveries.

    The suit goes back to 2010, when Safeway was accused of increasing the price of products sold online by 10 percent over in-store prices without informing its shoppers, which the plaintiffs said was a violation of its customer contract.

    Safeway is on the hook for $42 million - $31 million in what is seen as misbegotten profits, with the balance being interest accrued.
    KC's View:
    I’d write the check. Sounds like the bill is getting bigger with every passing day.

    Published on: August 11, 2017

    Reuters reports that Amazon is trying to develop partnerships with entertainment and sports venue owners in the US in an attempt to create a new ticket sales business in the US, a move that the story says “could loosen Ticketmaster's powerful grip on the lucrative ticketing business.”

    The story notes that this represents “the latest attempt by the world's largest online retailer to use its massive customer base, tech savvy and bargaining power to shake up a big market,” not to mention create even more value for its Prime members and expand its ecosystem.

    While Ticketmaster, owned by Live Nation, is the nation’s largest seller of event tickets, the story notes that consumers dislike the fees that it charges and venue owners would like to have “more distributors for their tickets as they seek to boost sales.”

    The story points out that “Amazon has had success with ticketing in Britain, where it has been selling seats to West End shows since 2015, even outselling Ticketmaster for some events, according to one of the sources, who owns venues in that country. It is less common for venues in Britain to have an exclusive ticket provider.”

    Rumors of Amazon wanting to get into the ticket sales business first emerged back in February.
    KC's View:
    It is stories like this that throws a curve at those who wonder if Amazon should be broken up because it has too much power. If Amazon gets into this business, it sounds like the result could be lower prices for consumers … and a disruption of a status quo with which many customers are unhappy. That’s supposed to be a good thing.

    Published on: August 11, 2017

    Advertising Age reports that “Bud Light, which has struggled amid the craft beer revolution, has a new message for drinkers: Simple beer is good, too.”

    The ads not only make a virtue out of the beer’s "four essential ingredients -- water, rice, barley and hops,” but it also pokes fun “at more complex brews.”

    The story notes that “Bud Light follows other traditional beer brands, such as Miller Lite and Heineken, that have sought to restore respect to mainstream lagers with product-focused marketing amid the rise of more complex craft ales.”

    However, Ad Age points out that so far the efforts have not worked, with brands like Bud Light and Miller Lite seemingly in perpetual decline.
    KC's View:
    Now, I grant you that I have a bias here. I spend my summers in Oregon, which is sort of ground zero for great craft beer. And I almost always try to order local/craft beers wherever I happen to be.

    But I have to wonder if the Bud Light folks are misjudging the zeitgeist … that the American public maybe is less interested in “simple” than in the past, at least when it comes to food and drink. Folks - especially younger folks - are more sophisticated about such things, and complexity and nuance doesn’t necessarily frighten them, at least when it comes to food and drink.

    Published on: August 11, 2017

    USA Today reports that DineEquity, patent company to Applebee’s and IHOP, plans to close as many as 160 restaurants, more than double the number of closings that it previously had announced.

    According to the story, 105 to 135 Applebee's restaurants will close, up from the original 40 to 60 slated to be shuttered; as many as 25 IHOP locations will close, up from about 18.

    However, the company said that it plans to make up for the closures by opening as many as 125 locations globally, but in new sites and cities.

    USA Today notes that “the casual-dining segment, where both chains are positioned, is experiencing increased troubles as more customers have gravitated to the quick-service restaurants like Panera Bread or Chipotle Mexican Grill, many of which market themselves as offering healthier and more upscale food.” Applebee’s especially is seen as being “out-of-favor with casual-dining consumers.”

    However, a DineEquity spokesperson said that closures are part of the business, that the locations were dated and badly performing, and that in the end by closing bad restaurants that company would improve its brand equity.
    KC's View:
    Call me a food snob, but you could shutter both chains completely and I’d never notice.

    And one other thing. I have real questions about any company that lets so many stores fall into the kind of condition that closing them helps the brand. Keeping the shine on the brand - the physical location, the people who work there, the product served, and the value/values proposition - is an everyday job.

    Sounds like it is a job that has been largely ignored in this case.

    Published on: August 11, 2017

    Southeastern Grocers, parent company to Winn-Dixie and Bi-Lo, yesterday named Anthony Hucker as its president/CEO. Hucker has been serving in the roles on an interim basis since late June, when Ian McLeod stepped down after less than two-and-a-half years in the job.

    Hucker is a former president/COO of Schnucks, as well as being a former senior executive at Ahold-owned Giant and Walmart.

    Meanwhile, the Houston Chronicle reports that Houston-based Fiesta Mart has named Sid Keswani as its new CEO, succeeding Mike Byars.

    According to the story, Keswani formerly served as COO of Aspen Heights, a real estate development company, and before that was senior vice president of operations for Susser Holdings; he also was an executive at Target for 19 years.
    KC's View:

    Published on: August 11, 2017

    MarketWatch reports that Koninklijke Ahold Delhaize NV has reported Q2 net income that was up 68 percent to $417 million, on total revenue that was up 67 percent to $19 billion. The company said that the results were a direct reflection of last year’s Ahold-Delhaize merger, and that synergies has brought the company $137.5 million in savings.

    • The Boston Globe reports that Dunkin’ Donuts is planning a new format store in Quincy Point, Massachusetts, which will be the first of its stores “to offer different drive-thru options targeting commuters into Boston … There will be four lanes for ordering converging at one pickup window: one with a microphone for ordering and a window for paying, two with touch-screens for ordering and paying by card, and one for those who already ordered and paid online.”

    The store will also test another company initiative - it is getting rid of the “Donuts” from its name and will just be known as “Dunkin’.”

    • AppCard Inc., a personalized marketing and shopper analytics platform for retailers, announced the acquisition of ProLogic Retail Services, which provides loyalty marketing solutions for independent grocers. Following the acquisition, AppCard says it will be processing “approximately 500 million transactions per year and reach more than 17 million households, which represents one eighth of the US households.” Terms of the deal were not disclosed.

    (Full disclosure: ProLogic Retail Services is a regular and valued MNB sponsor.)
    KC's View:

    Published on: August 11, 2017

    Got the following email from an MNB reader:

    Raised in the Brand Manager culture, the decline of branding bothers me.  It’s a concern that has been with me for a while.

    I believe branding is still a very powerful business tool.  I think corporations have used up the brand equity of major products by over pricing and under delivering. 

    How many times have we seen price increases to meet financial targets?  No product improvement.  No additional benefit.  Just higher and higher prices. Then, price discounts are used because volume is needed.

    No wonder private label goods are popular.  Same products and 30-40% less expensive.  A PEW Study of aspirin products found Bayer brand premium prices 30% higher for exactly the same generic product.  Doctors always used a generic.  Who paid the brand premium?  Less educated, lower income consumers.

    Now, my real point…

    Smart consumers are a brand's best customer.  But, only if the brand delivers.

    The major change coming is AI + super powerful smartphones.  Everyone becomes a smart consumer.  Phony brands beware.

    One more item.  Just saw new digital service.  This service takes in factual information about realtors.  Then recommends to home sellers the most effective realtor for any location based on recent sales, home selling prices, and other factors.  Who needs a brand like Century 21 when you can select the best realtor ... with your smartphone.

    Branding is still powerful when it stands for something of value.

    On the declining appeal of malls, MNB reader Joshua Herzig-Marx wrote:

    Here in the Boston area, one of our luxury malls (the Natick Collection) was roundly mocked when they attempted to add condos. And while naysayers may have been proven right when unsold units had to be liquidated at auction during the housing downturn, they’re now doing quite well. The fact that a Wegman’s is moving into the mall will only help. I’m not sure this is a model that could be repeated everywhere (and I’d take my organic, walkable community over a manufactured space anytime) is this any different from those New Urbanism-inspired spaces cropping up in redevelopment plans across the country?

    Regarding Walmart’s new “scan and go” initiative, MNB reader John Rand wrote:

    This is not particularly new at all – Ahold’s Stop & Shop had both scanners and a phone app deployed in many stores several years ago.

    Interested in it, I went shopping  with my wife who used the phone option exactly once. The app was fine in theory but the bar-code scanning didn’t work well – the emitted laser light was not strong enough, the “line” that told you where the scanning app was pointed was hard to see under the store’s lighting, and the ergonomics of holding your smart phone and pointing it at product bar codes was utterly painful after just a few minutes.

    Great idea but the reality of it was not terrific. The phone scanner app may be better now – but I suspect people’s wrists are about the same.

    I will wait for the Amazon Go technology. Or just buy stuff on my phone in the first place, thanks.

    Loved this email from an MNB reader:

    I asked my ten year child where we should go to lunch last week. Was the choice McDonalds, Wendy’s or Five Guys? Nope, the answer was Wegmans.

    We had a story the other day about how Chicago residents are adapting to being charged for single-use plastic bags - they seem to be bringing their own bags to the store more, which means the city is actually generating less revenue from the tax than expected.

    One MNB reader responded:

    As you put it, Chicago residents are adapting; they are adapting to having $3,000,000 less of their money to spend because it is being taxed by the city to create a disincentive to use plastic bags.

    What is the purpose of the tax - is it just an easy way to generate more City of Chicago revenue with a regressive tax increase that hits all people equally since all people tend to shop in grocery stores, regardless of income, or is there an environmental issue in Chicago?

    And from another reader:

    Yes, their behavior changed, they went to the suburbs where there is more choices and lower prices. It pays for the gas. Every time the hoopies in our "great cities" try to do a socialist experiment it backfires.

    I was curious about the word “hoopies,” with which I was unfamiliar. According to the Urban Dictionary, it is “an insult (worse than hillbilly) given to residents of West Virginia. According to history, the city of East Liverpool OH, across the river from WV, was an important maker of pottery. West Virginia residents looking for work in the area were only skilled enough to bang together the metal strips that would make the hoops needed for barrel construction.”

    I’m not sure the insult really works here. However, I’m a “great cities” kind of guy, and I’m not sure that it is fair to say that their approach is necessarily “socialist.”

    Regarding Procter & Gamble’s commercial about “The Talk,” one MNB reader wrote:

    I totally agree with you - this is brave, and very relevant in our current world.  We need to be open about these issues, otherwise how can we solve problems without facing them, out loud?  Congratulations to P&G for doing this.  I hope we see more.

    From another reader:

    I've sat my son down and had "the talk".  I told him that he's going to be judged by his outside appearances.  Some people are going to hate him for the color of his skin.  Others for his gender.  Yet still others for his sexual orientation.  He may even be the target for crime because of it.  Most of the time, they will blame him for the real (or imagined) acts of others, in sweeping generalizations that don't make any sense if one can read above a 4th grade reading level.  It's even worse when you visit third world countries.  It’s not fair but that's just how the world works.   Of course, my kid looks white.

    Give me a break.

    I think it is entirely fair to say that many people are subject to discrimination of various kinds during their lives. But to suggest there is any sort of equivalency between the discrimination a white person male may face with the discrimination faced by most African-Americans strikes me as absurd.
    KC's View:

    Published on: August 11, 2017

    Article text.
    Some MNB readers/friends of mine invited me to join them at a highly respected wine store called Vino, located on SE 28th Avenue in Portland … and I came away understanding why it is so highly regarded.

    It is pretty unassuming physically, but they’ve generated tremendous loyalty from customers with a terrific selection, weekend tastings that are linked to some real bargains, and a regular Friday night “Flights” feature that offers “a flight of five wines for $10, with two or three bonus pours for an extra charge. (Top picture.) Pacific Northwest pinot noirs often are featured, though the exceedingly hot weather last Friday night meant a late switch to whites and a rosé. Vino also encourages folks to bring their own snacks and food to enjoy while tasting; while we nibbled on fruit and cheese, the folks at the tAble next to us brought a pizza.

    What they do, I think, is manage to make all the various wines they have highly accessible, which is very good for business. Among the wines we tasted and that I really liked last Friday were the 2016 Owen Roe Mirth Chardonnay … the 2015 J Christopher "Cristo Misto” … the 2016 Bow & Arrow Melon, from the Willamette Valley … and the 2016 Helioterra Pinot Noir Rose.

    All were wonderful, just as the night was. And I thought to myself, this is how you run a tasting and a wine store. Unlike some places, where the owners want you to know how clever and superior they are, Vino is relaxed, congenial and highly approachable.

    The heat in Portland - often in the nineties, and occasionally shooting above 100 - hasn’t really bothered me; after all, at home in Connecticut, temperatures that high generally are accompanied by sky-high humidity, which is actually what gets you. But many Portlanders seem to have found it to be pretty unbearable…

    Among them were the folks who run the gorgeous Commons Brewery, on the corner of SE 7th and Belmont. I love the space - lots of brick, big windows, and an open, unpretentious floor plan. (Middle picture.) No air conditioning, though.

    I went there last week to meet a friend, got there at about 4:15 pm and ordered a Loud & Clear IPA. I asked what sort of food they served, and was told that they weren’t opening the kitchen that day because of the heat, and actually would be closing up the place at 5 pm.

    Really? I suggested, gently and respectfully, that warm weather actually was a good time to sell beer … but selling beer was the last thing on their minds that day. They just wanted to find a place with air conditioning.

    So we left at 5, and went someplace else.

    Loved the IPA, though. I’ll be back, but on a cooler day.

    Did you ever have one of those places that you passed by all the time, but for some reason never entered even though it looked kind of cool?

    There are a bunch of those places here in Portland, but one that I’ve always meat to patronize was a place called The River Pig, over on NW 13th Avenue. This summer, I decided that it was time to check it out … and it was very much worth the wait.

    The decor is kind of outdoorsy and cool, but I’m always a little less focused on that than the food and drink. In this case, it was amazingly great shrimp tacos, washed down with Point Blank Red Ale. (Bottom picture.) Then, I decided to try something called Brody's Apple Pie Moonshine, which is made somewhere in the Oregon Valley. It was a little sweet for my taste, but pleasingly strong, and I drank a small jar of it because, well, it would’ve been rude not to finish.

    Then I went home and slept like a baby.

    I want to recommend the movie Detroit to you. Detroit is written by Mark Boal and directed by Kathryn Bigelow, the team that brought us The Hurt Locker and Zero Dark Thirty, so they’ve got credibility with based-on-a-real-story projects.

    The movie takes place during the 1967 Detroit riots, and most of the film focuses on an incident that took place at the Algiers Hotel, where several white cops were accused of abusing African Americans who they suspected of shooting at them. Detroit is tension-filled and, while we don’t tend to learn very much about the characters, it doesn’t really matter … this is not a character study, but an indictment of a time when there was “us” and “them,” seen through the prism of one appalling, sickening incident.

    There are some very good performances in the film, but to me the undeniable stars are Bigelow and Boal. There has been some controversy about whether this film should’ve been made by a white director and screenwriter, but for me they get a lot of credit just for making it. It is a serious movie about a serious subject made by and for serious people.

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


    KC's View: