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    Published on: August 15, 2017

    by Michael Sansolo

    When meal solutions were first exploding in supermarkets in the 1990s, a key executive at Ukrops - then the gold standard of such things - offered a sobering piece of advice.

    At the time everyone wanted to copy Ukrops, without learning the painful lessons the company endured to achieve its success. To paraphrase that executive, Ukrops had made years of mistakes to get things right and others were going to find a similar path. The road to success was going to be full of problems. (To be clear, none of these issues led to Ukrops demise a few years back. The company’s reputation in meal solutions never suffered.)

    Frequently we need to learn carefully from others’ mistakes in hope that we can avoid repeating them ourselves. With that in mind, I want to double down on a suggestion Kevin made yesterday. Everyone need find and read the New York Times article about the decline of Sears and take it to heart.

    Now, not every part of that article is relevant. Clearly, a good bit of Sears’ decline was caused by leadership decisions that in many ways are unique to the once-giant retailer. But there were two specific mistakes mentioned in the article that any other company could look at and honestly admit that they are capable of making both.

    The lessons come from Victoria’s Secret and Nicki Minaj.

    Let’s start with Minaj. The rapper/singer/songwriter may be incredibly popular in some circles, but Sears’ management made the critical mistake of forgetting exactly who is shopping individual stores and why.

    The article detailed a management mess-up in which a specific Kmart store was left undersupplied with heavily promoted televisions on Black Friday, the time they were most in demand. In contrast, the store was well stocked with Minaj’s clothing line and probably stayed that way for a good long time. As one assistant manager explained, the store was in a religious area where women dressed far more modestly than the styles offered.

    It was a total unforced error and is probably one of many reasons why that store is no longer in operation. But it wasn’t a unique mistake. Many other companies - retailers and suppliers alike - have similarly misread a trend and either jumped on it to late or brought it to the wrong shoppers. As the article made clear, Kmart and Sears were both especially prone to such errors.

    The Victoria’s Secret example may be even more important in our current environment, in which everyone seems to be racing at breakneck speed to add e-commerce capabilities and achieve omni-channel status. Such issues are clearly a reality today, but Sears’ example might remind you of just how challenging this could be.

    Sears believed it could quickly become an omni-channel player. The company had a history of mail order success; in fact, that’s what built the company. And its army of stores assured management that distribution should be no problem. Only Sears’ problem wasn’t distribution, it was a diluted brand and falling store traffic.

    One Sears’ executive cited Victoria’s Secret, as company with a strong store experience and brand, as the contrast. “Victoria’s Secret has a $1 billion online business…because (they) understood the customer in a way that Sears never did.”

    That’s a stark reminder of the challenges out there today. Adding e-commerce is an important idea, but only if you have the brand identity and power to make it work. Otherwise you may simply be adding a new way to lose money.

    So read the Sears’ article and maybe even chuckle at some of the mishaps and missteps that have laid low the once great company. And then start thinking about how to avoid the same fate yourself.

    Michael Sansolo can be reached via email at . 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.
    KC's View:

    Published on: August 15, 2017

    by Kevin Coupe

    As all hell was breaking loose in Charlottesville, Virginia, last weekend, with neo- Nazis, members of the KKK and assorted other white supremacists and hate groups engaged in a rally that turned deadly, it ends up that a Wegmans that was just a couple of miles from the epicenter of the violence was instrumental in preparing and donating food for first responders.

    According to the Democrat & Chronicle, “Charlottesville store managers halted daily work to prepare food for first responders working to quell the unrest … First responders entered the store late Saturday planning to purchase several pizzas, drinks, but left with a vehicle filled with donated hot food, chips and drinks.”

    A Facebook posting by the Metro Richmond Fire Incidents said that “store managers halted their daily work and ‘dedicated themselves and other staff to cooking for us. They fired up all their ovens, called in extra bakers and even emptied their freezers to cook boxed pizza for us when they ran out of dough.

    The night manager stayed till 1 a.m. The opening manager had carts lined up for us with breakfast, sorted by delivery location. The store practically refused to take a payment until we told them we wouldn't leave until they did’.

    “In all, food prepared at the store fed more than 1,000 police officers and National Guard members, ‘amid absolute chaos and with no advanced notice,’ according to the post. The deed culminated Sunday morning with 500 Virginia State Police troopers ‘walking into their location, bereft with grief, yet so thankful to see a 20-foot long counter lined with breakfast’.”

    It is Eye-Opening to know that in a situation where racists and bigots and hate mongers show us the worst of humanity and the polar opposite of what this country is supposed to be all about, there are people and places that show kindness and empathy, demonstrating and reflecting the best of the American spirit.

    It also should be Eye-Opening to businesses that the spotlight will find those that behave well, and those that do not. There is no place to hide, and so businesses and business leaders must do the right thing.
    KC's View:

    Published on: August 15, 2017

    Bloomberg reports that Target is acquiring Grand Junction, described as “a San Francisco-based startup that links retailers and other distributors to a network of more than 700 carriers across North America. Grand Junction currently handles the same-day delivery service for Target’s store in Manhattan’s Tribeca neighborhood.”

    The story notes that the deal is designed to give Target the tools to increase the speed of its order fulfillment, and give it a better chance of competing effectively against Amazon and, increasingly, Walmart.

    Target reportedly hopes to expand same-day service to other New York City locations by later this year, and to other US cities sometime in 2018.

    Terms of the deal were not disclosed.
    KC's View:
    This is just part of the equation. Target also has to start carrying more products that people actually want, upgrading its stores so people actually want to go there, and really improve the food side of its stores.

    Published on: August 15, 2017

    Yesterday, MNB took note of a CNBC story about how meal kit company Blue Apron may have miscalculated with an IPO that was supposed to generate significant investment capital, but instead has just resulted in a steadily decreasing company valuation.

    But now comes the news that hedge fund Jana Partners has invested about $5.6 million in Blue Apron, giving it ownership of about 600,000 shares.

    What’s interesting about this investment is that Jana Partners is the same company that took a significant position in Whole Foods earlier this year, pushed for changes at the company, and eventually created the climate that allowed Amazon to step in and make a $13.7 billion bid to acquire the grocer. Jana sold its stake in Whole Foods in short order, for a profit of about $300 million.

    CNBC notes that, ironically, “Blue Apron launched its roadshow the Monday after the deal between Amazon and Whole Foods was announced. Many investors, fearful that the combination of Amazon and Whole Foods could eat away at Blue Apron's share, passed on the deal.”
    KC's View:
    If Jana is investing in Blue Apron, it means it must see the opportunity for some green cash. It seems that the odds of Blue Apron being sold to someone, and Jana turning a tidy profit, have just gone up.

    (BTW…isn’t Blue Apron doing a test with Whole Foods in Massachusetts? How funny would it be if Whole Foods/Amazon ended up buying it, contributing even more to the cash flow at Jana?)

    Published on: August 15, 2017

    CNN reports that a US District Judge has ruled that Costco must write Tiffany a check for $11.1 million in trebled profits, plus $8.25 million in punitive damages, a result of a finding that Costco had improperly labeled rings it was selling as “Tiffany rings,” even though they weren’t made by Tiffany.

    According to the story, Costco had only labeled the jewelry as “Tiffany rings,” in in-store signage, and later maintained that “Tiffany” was a generic term. The complaint goes back to 2013, and two years later an initial court ruling concluded that Costco was violating Tiffany’s trademarks.

    Costco has pledged to appeal the ruling, saying that “this was not a case about counterfeiting in the common understanding of that word -- Costco was not selling imitation Tiffany & Co. rings.”
    KC's View:
    Methinks they doth protest too much. The minute you put the word “Tiffany” on a sign with a capital “T,” it seems to me that you know exactly what you’re doing. Clearly there is a legal issue here, and I’m no lawyer … but common sense tells me that if Costco did not know it was skating on thin ice, it should have.

    Published on: August 15, 2017

    The Washington Post reports that Europe is running out of butter, and the Federation des Entrepreneurs de la Boulangerie, an industry group for French bakers, calls it a “major crisis.”

    Here’s how the Post churns the story:

    “The shortage comes at a time when demand for butter is booming. For  years, margarine and other butter substitutes were the rage. But now consumption of the real thing around the world is on the rise … The growing demand has put a strain on the industry. Due to a significant fall in prices mainly brought on by a 2014 Russian embargo of European food products, the cost of a bottle of milk in many parts of the continent was lower than a similar bottle of water. The industry responded by producing less and dipping into their stockpiles, causing a 98 percent decline in inventories. Now, as prices have begun to rise again, there’s not enough butter to go around. Things are so bad that the chief executive of one large U.K. dairy recently warned that there may not be enough milk and cream for everyone at Christmas.”

    Indeed, “with butter prices rising more than 20 percent over this time last year and supplies dwindling,” bakeries, restaurants and food businesses may be “forced to increase their own prices to maintain margins … or discontinue products altogether.”
    KC's View:
    Sacré bleu!

    When I read this story, all I could think about was how, when I was much younger, friends of mine used to travel abroad and take bags and bags of Levi jeans with them, which they then were able to sell. The refrigeration issues might be a little tough, but maybe we can get a little butter black market growing.

    In all seriousness, how are we not able to export butter to Europe? There’s got to be some excess butter lying around a warehouse somewhere in the US, or at least some dairy cows that are being under-utilized.

    Published on: August 15, 2017

    ReadWrite reports that Amazon has filed for a new patent that “shows how special facilities connected to trains, boats, and vans could be used as storage space and repair stations for drones. The drones would be moved to areas of anticipated demand and fly out from the mobile hub.”

    The filing reads as follows: “The intermodal vehicles may be coupled to locomotives, container ships, road tractors or other vehicles, and equipped with systems for loading one or more items onto the aerial vehicle, and for launching or retrieving the aerial vehicle while the intermodal vehicles are in motion … Additionally, intermodal vehicles may be loaded with replacement parts and/or inspection equipment, and configured to conduct repairs, servicing operations or inspections on aerial vehicles within the intermodal vehicles, while the intermodal vehicles are in motion.”

    The story notes that “Amazon is filing quite a lot of patents to do with drone travel and storage. It patented a zeppelin concept that had drones delivering parcels from above and mini zeppelins supplying the mother. A few weeks later it filed a vertical warehouse in the shape of a beehive. Even with all these filings, Amazon is still a few years away from any serious drone deployment. The company has conducted a few tests in the U.K., but has yet to integrate drones into any of its Prime services and the laws on drone use are still in flux across most of the world.”
    KC's View:

    Published on: August 15, 2017

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

    • Ahold Delhaize CIO Franz Muller has been quoted in De Financiële Telegraaf as saying that post-merger, Ahold Delhaize is growing ever stronger in the US, and as a result is currently open “to opportunities for acquisitions to strengthen our position on the East Coast.”

    We know that Ahold Delhaize has realized savings from the merger, which made me ask whether the company is focused purely on efficiency or will be investing the money saved in being more effective. This story prompts a corollary question - whether Ahold Delhaize is really stronger, or just bigger? I still want to see how Ahold Delhaize is going to transition into being a 21st century retailer. (I’m certainly not seeing it at my local Stop & Shop stores…)

    • Interesting piece in the New York Post about how, while many big retailers are facing economic issues, with store closings expected to hit 8,640 by the end of the year, the pain may be hitting larger companies more than small ones.

    According to the story, this retail apocalypse “has hit the big boys much harder than smaller retail concerns, and the demise of the big-box stores is as much due to the growing tendency of consumers to shop small and local as it is to the internet.”

    “The spending shift from large retailers to small businesses has been spurred by the latter’s ability to deliver prompt and personal services,” writes Krista Fabregas, an analyst, in Fit Small Business, an online retail-sector trade publication. She points out that “7 out of 10 millennials claim that purchasing American-made products is important to them, and 40 percent say that they prefer to shop at local stores even if they spend more.”
    KC's View:

    Published on: August 15, 2017

    Reuters reports that Target has hired Mark Kenny, the former senior director of private brands, deli and bakery at Wal-Mart, to be its new vice president of meat and fresh prepared food.

    At the sane time, the company has hired Liz Nordlie, former president of General Mills' baking division, to be its vice president of product design and development for food and beverage.

    Both appointments are seen as key to the company’s efforts to overhaul its food business.

    • Publix announced that Erik Katenkamp, the company’s vice president of information systems - application development, has been promoted to the role of vice president of Omnichannel and Application Development.

    • The Phoenix Business Journal reports that PetSmart president/CEO Michael J. Massey is stepping down from his role there. He’s been there since 2015, when the company was acquired by a private equity group; one of its achievements was the acquisition by PetSmart of, an online pet retailer.

    PetSmart will be led on an interim basis by Raymond Svider, a managing partner at BC Partners, the private equity group that owns PetSmart, while a permanent successor is sought.
    KC's View:

    Published on: August 15, 2017

    Got the following email from MNB reader Janis Raye, regarding our meal kits story:

    I was looking at meal kits as a Christmas gift for my kids (Millennials), and I ended up with Chef’d — not because it was the lowest priced, but because it had a lot of flexibility. You aren’t locked into 2 or 3 meals a week, but rather, just get the meal kits when you want them. I liked the fact that you point out, that they are linked to a lot of other companies, including the NY Times Cooking recipes, which I read a lot. I can’t picture using a meal kit service myself, but since they are still kind of beginning cooks, I thought it could be fun every now and then.

    On another subject, from MNB reader Bob Gorski:

    As a designer for the independent grocer and retailer, I believe this is the dawn of a new age for the independent and co-op. With the Amazon purchase of Whole Foods, the independent and co-op are truly the last vestige of the non-corporate format.

    Provide great customer service, fresh product, near or better restaurant food service, and a clean store you will thrive!

    Dorothy Lane, Kowalskis, Wegmans, Jimbos, to name a few...and I have based my business model on this format!

    The only caution I would offer is that there are too many independents that think they somehow are entitled to survive, or have some sort of moral superiority, just because they are independent, just because they are small. Which is nonsense.

    There are some wonderful independent retailers out there, but the really great ones understand that they have to earn it, every day.

    Regarding the faulty eclipse glasses for which Amazon is providing refunds, as well as warnings that they don’t work, MNB reader Bob Thomas wrote:

    In about 15 minutes I was able to find out some information about Websun that Amazon could have checked.  Their website has a .US extension but their contact information is all in China.  That would make the extension a violation since the company is not located in the US.  The registrant contact for the website is not known on Social Media and the address for the registrant contact is non-existent.  Hopefully no one will use those eyeglasses and Amazon will take action against the company that fraudulently offered them as safe on the Amazon website.  Should Amazon be sued their hold harmless clause with the supplier will most likely be worthless because there is no company by that name, the company will dissolve immediately on receipt of a lawsuit or the judgement will not be collectable.  Of course they can take them off of Amazon though they never should have been allowed on to begin with but the “company” has other websites.  Amazon has to be better if they want to compete with Alibaba.  With the computer tech that Amazon has my 15 minutes could probably have been 2 minutes.

    On the possibility that Amazon could get into the ticket selling business, MNB reader Monte Stowell wrote:

    Hooray for Amazon if they can add competition to the ticket event marketplace. I can remember buying tickets to lots of concerts and sporting events when there was no additional charge over and above the announced face price of a ticket. Frankly, when Ticketmaster came into being, the price of the tickets with their additional fees did not justify what they charged. I only hope that Amazon can take on Ticketmaster and any other ticket seller to bring change to lower fees when buying an event ticket.
    KC's View: