business news in context, analysis with attitude

Published on: December 19, 2017

by Michael Sansolo

I always loved the business wisdom about the options we have with a dead horse. As opposed to the legendary Dakota tribal wisdom, which is that the only move is to dismount, businesses usually employ countless other strategies employed. Such as:

• Buy a stronger whip.
• Change riders.
• Appoint a team to revive (or study) the dead horse.
• Declare: “This is the way we have always ridden the horse!”
• Ignore the dead horse.
• Hire a contractor
• Or my favorite: Pair it up with more dead horses to increase speed.

The entire metaphor always plays in my head whenever assorted mergers and acquisitions dominate the news. Truth be told, I’m not smart or savvy enough to really know which mergers are simply a marriage of dead or dying horses and which ones could lead to wonderful alchemy.

For all I know, the marriage of Disney and Fox will produce a single media company far better able to deal with the fast-changing media consumption industry. Likewise, Campbell’s purchase of Snyder’s could produce strong efficiencies for the packaged goods company.

And Target’s purchase of Shipt will truly allow the retailer to build a bridge to its omni-channel future.

Then again, one, two or all of them could wash out. We just cannot know.

Recently I was asked by a European trade journal to make some predictions for 2018 and for once I answered with complete honesty - that I just don’t know. As I explained, I never once predicted the biggest news of 2017, that Amazon would buy Whole Foods. In fact, I never heard any one else make that suggestion.

The reality is that we are in a brave new world and it’s hard to imagine what unexpected marriage or merger would totally shock us anymore. Anything seems possible, which is both wonderful and terrifying.

That means we enter the New Year with incredible uncertainty. More than ever we need embrace the reality of continuous improvement by accepting that everything we consider good enough no longer is. Kevin and I are fond of quoting Norman Mayne’s reminder that your reputation is built on what you did in the past, and that the challenge every day is to build the future.

I have little doubt that we’ll end 2018 in vastly different shape than how we begin it. We’ll have some new technologies that reshape countless elements of our lives, including how we shop. There will be new trends, new tastes and new desires that change what and how we eat. There will be some mergers that amaze or puzzle us as companies try their best to evolve with the new climate.

Only no one knows for sure what those changes will be.

This much we do know: examine your horses and honestly assess whether they are dead or dying. If so, there’s only one change to make.

Dismount and run faster than ever. It’s what the times demand.


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: December 19, 2017

by Kevin Coupe

We’ve long talked here on MNB about the power of differentiated products and services, emphasizing the point that if 85 percent of what a supermarkets sells is the same as what most other supermarkets sell, it stands to reason that success or failure will be found in the other 15 percent - the stuff that makes a store unique.

A metaphor that we’ve often used is how Netflix decided early on that if it was going to compete long-term, and not just be a Blockbuster-killer, it needs to have proprietary content - TV series and movies that one could only see on Netflix. Amazon has essentially decided the same thing, creating its own programming to differentiate its offering and bolster the value of Prime membership. This has brought them into competition with the broadcast and cable networks, which in turn have devoted far more of their bandwidth to original programming - and all of these entities have spent billions of dollars on what basically is private label content.

We’ve also reported in the past on how Apple now is getting into the game, and has begun commissioning its own programming to feature in the iTunes Store. Apple has three TV series in the pipeline - a drama about a morning show that will be produced by and starring Reese Witherspoon and Jennifer Anniston, a reboot of “Amazing Stories,” the old Steven Spielberg anthology TV series, and now, what sounds like its most ambitious - and potentially most audience-building - series yet.

The unnamed show is described as a space drama from Ronald D. Moore, who didn’t just create the critically and popularly successful reboot of “Battlestar Galactica,” but also served as a writer on “Star Trek: The Next Generation,” “Star Trek: Deep Space Nine,” and “Star Trek: Voyager.”

And if that isn’t enough creative firepower, there are producers on board who have worked on such successful TV series as “Fargo” and ‘Outlander.”

Beyond that, there’s very little confirmed information about the series, nor is there a premiere date. But the point is that the battle for quality, differentiated content rages on, with a lot of very good and successful companies having concluded that they need to swing for the fences if they’re going to continue to be viable, with long-term prospects.

It is the kind of Eye-Opening conclusion that I think more stores need to reach.

Published on: December 19, 2017

The Washington Post has a piece about a store called Story, that sits on a ground floor of a residential building “in the shadow of Manhattan’s High Line,” that has a unique approach to the challenges of bricks-and-mortar retailing.

“Story changes its theme, or ‘story,’ every few weeks,” the Post writes. “The website says it has the ‘point of view of a magazine, changes like a gallery, sells things like a store.’ Staff members are called ‘storytellers’ and greet everyone at the door.

“The brainchild of fourth-generation retailer Rachel Shechtman, Story has been profitable since its first year of business in 2011. On a holiday-season Saturday, says Shechtman, as many as 5,500 people parade through its glass doors.”

“People are yearning and desiring of experience,” Shechtman says. “The idea is that you tell stories through merchandise curation and event promotion.”

The Post goes on: “Story holds yoga and cooking classes, and dozens of DIY workshops. In early December, style icon Iris Apfel held her sixth trunk show at the store. It’s a destination, a hit on social media, a hub that extends well beyond the neighborhood.

“Shopping there feels exclusive and special, and not like something that you can replicate at home. Because you can’t.”

Published on: December 19, 2017

The Boston Globe reports that Boston Mayor Martin J. Walsh has signed into law a ban single use plastic bags there. The ban takes effect in one year, and makes Boston, according to the story, the 60th municipality in Massachusetts to take such an action; hundreds of cities across the country have banned single use bags.

The ban is designed to “encourage shoppers to use reusable bags or pay a 5 cent fee for either a thicker, compostable plastic bag or a larger paper bag with handles. Stores would collect the fees to help offset the cost of using more-expensive bags.”

Before signing the new law, Walsh had expressed concerns that “the city’s low-income residents and seniors would bear the financial brunt of the new rule,” but he decided that environmental issues were too great to ignore.

The Globe writes that “Walsh’s decision ends more than a year of debate over whether to eliminate disposable shopping bags and steer businesses and consumers toward reusable ones. The goal, supporters say, is to reduce litter and cut the amount of plastic in the environment.

“Opponents included representatives of the paper and plastic industries as well as critics who say the measure will amount to a tax on the poor. The Retailers Association of Massachusetts also opposed the ban.”

Meanwhile, the CBC reports that the city of Victoria, in British Columbia, will ban single use plastic bags beginning July 1, 2018, finally implementing an initiative that it began “mulling” in 2015.

The story says that lawmakers there “approved a bylaw which prohibits grocery stores from offering or selling plastic bags to shoppers. Stores can still offer paper bags or reusable bags for a cost if customers ask … Under the new ban, there will be exceptions. Stores can still offer plastic bags to package bulk items as well as for meat, prescriptions and dry cleaning.”

According to the CBC, “During consultations on the proposed ban, industry stakeholders — such as the Canadian Plastics Industry Association — said banning bags is a mistake. The association argued that plastic bags that wind up in landfills can be recycled. It also says plastic bags are used for multiple purposes such as garbage bags.

“In Vancouver, councillors are also moving toward reducing single-use items such as coffee cups, food containers and plastic bags.”

Published on: December 19, 2017

Kroger said yesterday that it has launched ClickList - its click-and-collect service - in its 1000th store, and at the same time has “launched a new integrated digital shopping experience for its online shopping offering,” which “focuses on providing Kroger customers with quicker and easier access to relevant products and recipes, digital coupons, weekly ads and shopping lists joined by an easy-to-use, fully integrated ClickList experience.”

The announcement noted that “Kroger introduced its first ClickList store in November 2014 in Liberty Township, Ohio. The company’s 1,000th store with ClickList is located in Milford, Ohio,  located near its headquarters in Cincinnati.”

Published on: December 19, 2017

• The Wall Street Journal reports that Amazon is taking a strong lead in the smart speaker business by engaging in aggressive price cutting.

According to the story, “Amazon slashed prices on its new lineup of six Echo devices as part of its Black Friday promotions last month. The price drop for its entry-level Dot, to $30 from $50, helped make it the No. 1-selling product on the online retail giant’s website over the Thanksgiving weekend. The new version of Amazon’s original Echo speaker now sells for $100, roughly half the price of the first-generation device when it launched three years ago.”

Which forced Google to engage in similar price cutting, and Apple to delay the introduction of its HomePod until after the holidays.

Published on: December 19, 2017

• The News-Herald reports that Meijer has announced a partnership with Wahlburgers - the restaurant chain owned by actors Mark Wahlberg, Donnie Wahlberg, and their brother, chef Paul Wahlberg - that will lead to several of them being opened inside Meijer stores.

A similar deal with Hy-Vee, which will have 26 Wahlburgers restaurants opened inside its supermarkets, was announced earlier this year.


• CNBC reports that “Campbell Soup is acquiring snacks company Snyder's-Lance for $4.87 billion in cash, the largest ever deal in the soup company's 148-year history … The deal underscores the drive for food industry consolidation as traditional food companies watch their sales drop and struggle to create growth or innovation on their own. It points to the opportunity they see in snacks, appealing to the increasing number of people who eat and shop on the go.”


• Bloomberg is reporting that bankrupt Toys R Us “is considering closing at least 100 U.S. stores and maybe as many as 200” as it looks to figure out what to do about weak holiday sales that may end up being 15 percent lower than last year’s.

"Decisions about our real estate portfolio will be made only after careful consideration about the best interests of our business," said a Toys "R" Us spokeswoman in a statement. "Any speculation about potential store closures at this time is premature and likely to be inaccurate."

Published on: December 19, 2017

The New York Times has a terrific piece about the company that invented and marketed the Instant Pot, which has turned into a phenomenon in the cookware business.

The Instant Pot, the story says, is “a line of electric multicookers that has become an internet phenomenon and inspired a legion of passionate foodies and home cooks. These devotees — they call themselves ‘Potheads’ — use their Instant Pots for virtually every kitchen task imaginable: sautéing, pressure-cooking, steaming, even making yogurt and cheesecakes. Then, they evangelize on the internet, using social media to sing the gadget’s praises to the unconverted.”

The Times goes on: “The Instant Pot is hardly the fanciest appliance on the market; several models sell for under $100. But it has upended the home-cooking industry. During this year’s Black Friday sales, the Instant Pot was among the Top 5 items sold by Amazon and Target, and among the Top 3 best-sellers at Kohl’s.”

Yikes.

How did I miss this thing?

You can read the entire story here.

Published on: December 19, 2017

Got the following email from MNB reader (and one of my favorite people) Robin Russell:

I’m weighing in here, on your piece about the USDA reversing the rules on humane treatment for USDA Organic livestock. Your commentary about whether the move could be seen as anti-consumer, putting the needs of companies ahead of shoppers, and letting the organic companies differentiate themselves by voluntarily taking the high road with higher standards, totally missed the point! “A density of three per square foot of floor space and never allowed outside.” I’ve been in a barn with 200 chickens and the stench was so bad it made my eyes water. They’re talking 180,000 in a barn in ‘organic’ egg farms! No wonder the yolks are pale yellow and tasteless. And regardless of labeling, what cretin wants to be known for making a backward-looking return to factory farming where cruelty is as thoughtless as…yelling at your dog?

We are supposed to be an honorable people who do the right thing and take care of those who are less fortunate. Animal cruelty does not get a free pass in that vision.

Robin also offered the following quote:

“The greatness of a nation can be judged by the way its animals are treated.” - Mahatma Gandhi

But, to be fair, MNB reader Tom Herman had the opposite view:

That is exactly how free markets are supposed to work.  Organic companies are free to create higher standards and market them as a competitive advantage.  I’m not sure what is wrong with that.  I find it quite ironic that the same people that championed the use of the federal rules making bureaucracy to impose rules outside of their congressional statues now find it so wrong when a new administration changes it back to the status quo.

First of all, what you’re essentially saying is that elections have consequences. No disagreement. The good news, if you disagree with the outcome of an election, is that another one will come along in two years, and in the meantime you have options like protest, civil disobedience and the legal system to challenge the government if you think leadership is taking it in the wrong direction.

I do have to say, though, that I see a significant point of difference between Robin’s email and Tom’s. Robin is challenging us to be better … while Tom wants us to go “back to the status quo.” I know where I come down in this debate.
 



MNB reader Katherine Dykes wanted to follow up on my Monday FaceTime piece time criticizing the customer service at my local Apple Store:

I’ve been wondering about Apple myself lately. Remember how Apple taunted Microsoft over their buggy operating system releases? I sure do! I remember every time I have to recharge my iPhone mid-day since the iOS 11 release. When it’s time for a new phone, I will look seriously about moving off the iOS platform because I’m not sure it’s worth the premium price any more.

I’m not sure if it is arrogance or complacency or some combination of the two. I also cannot say for certain that this is happening in every Apple Store, though I’m now going to make it a practice to stop in whenever I pass one and just stand there and wait to see if anyone asks if they can help me.

Just to see if they’re bringing their A-game.

I do this, y’know.

Remember my piece from a couple of weeks ago pointing out how dirty the cart corral was at my local Stop & Shop store. (I wasn’t really picking on Stop & Shop, though I’m sure they felt differently about it. To me, it was an object lesson about how bricks-and-mortar stores cannot operate if they want to be successful in today’s cutthroat competitive environment.)

Well, I’ve gone back a few times since then, and my wife and daughter have been tasked with the job of also checking out the cart corral whenever they’re in the neighborhood. Right after the piece ran, with a photo of how disgusting it was, that corral was about as clean as I’ve ever seen it. Almost spotless. But since then, there’s been just a tiny bit of slippage … and I’ll be keeping my eye on things, with camera at the ready, just in case it once again gets as bad as it used to be.

From MNB reader Karl Konrad:

I’ve had the same experience at my Apple store in NorCal and the Stoneridge Mall. Walk up, have to get in line to check in and then while I wait get more and more hot under the collar as I watch the red shirts mill around, congregate and talk amongst themselves.
 
Not a good experience at all. They recently moved into a new space expanding the sales floor by 50% but the line to get help are just as long. Seems they will help you if you’re buying something much faster than if you need help. This doesn’t make for a good user experience.

And another:

Very timely posting today.
 
My 85 year old father in law was venting about the same situation to me this weekend. He experienced that same thing, the red-shirts standing around not really doing anything. He was there on a Monday or Tuesday and the guy with the i-pad said they could help him on Friday
 
So it wasn't a unique instance!

MNB reader George J. Denman wrote:

I had a very similar 1st experience last month when I purchased my 1st Apple Mac for home. I walked into the Kenwood store and saw several associates chatting with each other and when I approached the nearest to me I was directed 1st to a lead agent  back at the front of the store and then to the other side to the group chatting. Seems counterproductive since every table was set up with the same items but it must be their system.

And from another reader:

I found your Apple experience to be similar to ours.  My husband I and purchased an iPhone in the Vancouver, BC store on Saturday.  A “human kiosk” (his term, not mine) helped us and 2 other customers at the same time once we knew exactly what iPhone we wanted to purchase.    This store normally provides fantastic repair service with appointments and hopefully this was an anomaly.
 
The human kiosk/genius was pleasant but haggard.  Sat Dec 16 was of course an extremely busy shopping day but the experience didn’t feel like I was purchasing an expensive product.

And another:

Your commentary on your Apple Store experience is very illuminating and furthers my belief that Apple is falling further and further behind in a race that they were once the best in. My fiancé and I have had iPhones for years and years, but after this last iOS disaster Apple has clearly shown that they care more about coming out with shiny, expensive products than actual quality devices.
 
Now, my experience is solely based around the iPhone, but the iOS 11 has only given my family trouble ever since it came out and the hastily released updates that didn’t fix all of the bugs has done nothing but left a bitter taste in our mouths about Apple. For such an expensive product, the software should run flawlessly. Needless to say, when we get new phones next year, they will be anything but Apple.

But, MNB reader Jim Levey had a different perspective:

Wow Kevin. I had just the opposite experience. I walked in the front door, a young lady was waiting to help me. I told her what I was looking for, she made some notes in her iPad and directed  me to the area where the items were and said someone would be right over. Within 20 seconds a young man was helping me . I selected what I wanted and within minutes another Red shirted employee delivered the product. I was in and out of the store in 10 minutes. As I was walking out I said to my daughter, “All retailers could learn something from Apple”.

As did MNB reader Tom Robbins:

Yes, it has been a long time since you have been “bricks and mortar” shopping.

My two favorite ( I really don’t mean it) Apple stores are, The Fashion Mall Indianapolis and the Center City Mall Scottsdale.

Both of these have required “appointments” preferably set up in advance of visit (ala Geek Squad). At the Fashion Mall Apple store you must check in with an appointment before they let you in the store, and yes there are lines of people waiting just to get in.  (No cruising the aisles at will). The real amount of customer service is in fact very marginal because everyone is specialized.  

Oh, this process has been going on for some 4 years now so I’m guessing that you, as they say in the song,  “don’t get around much anymore”.

Actually, I’m in Apple Stores a lot, but this was a new experience for me. Look, I don’t mind signing in to get service, but I think they have to be a lot more transparent about how the system works. And I hate it when employees seem more interested in talking to each other than to customers.




Regarding the decision by two more major suppliers - Unilever and Tyson - to drop out of the Grocery Manufacturers Association (GMA) trade association and lobbying group, one MNB reader wrote:

I have been involved with local trade organizations for many years and have seen major changes in their relevance to the industry.  What I have seen, is that the organizations have morphed from a “voice for the industry” to a social gathering.  Social gatherings are nice, but they don’t drive cases.  So as a small manufacturers rep., the money needed to participate in these events, has to be siphoned from the same pot as promotions.  So the question becomes, would I rather spend $$$ for myself to go to a vacation destination and maybe meet with 3 people or 4 people and then see the rest at the bar, or spend that same amount at the retailer level to drive volume.  The answer to my organization seems pretty clear.

Sad to see, but without providing tangible value for the members, these organizations will continue to dwindle.




On another subject, from another MNB reader:

I have to tell you about a retailer truly going above and beyond to both differentiate themselves and redefine the customer experience. On several occasions pet owners have shared their stories of pets who passed away yet the owner forget to turn off their Chewy.com auto ship delivery of pet food. When the food shows up on their doorstep, they sadly reached out to the customer service department to ask to return the merchandise. Chewy’s response? They give a full refund (including shipping costs) and ask only that the pet owner donate the food to a local shelter. Owners have reported that within the following days they have received flowers from Chewy along with a sympathy card for the loss of their pet. One woman even said that Chewy asked for a photo of her pet that had passed so that it could be added to the company’s memorial book.
 
And, after a quick google search, it looks like my dog’s brand of food is cheaper there than at Amazon…




Responding to the story about people who, for a variety of reasons, keep working into their eighties and even their nineties, MNB reader Lance Hollis McMillan wrote:

Find what you love and let it kill you.

I’m not sure I’d put it quite that way. In fact, I prefer the words of the great modern philosopher, Jimmy Buffett:

“I'd rather die while I'm living then live while I'm dead.”

MNB reader Anne Evanoff wrote:

Agreed. I am not retirement age quite yet, but looking at the concept and I do believe if my health persists, that I am just now getting my third or fourth wind.
For the reasons you mentioned, recession, savings, love of work – I anticipate working well into my seventies or eighties. I have to keep learning and earning.

An hour ago riding an Uber to the airport, I shared how amazing EDX is with the immigrant African driver – EDX is part of my plan to always keep learning. Apparently I was in the right place at the right time, and even got called ‘an angel’!

Work is what allows me to travel and meet so many wonderful people – I love that and unless someone or something reinvents my concept of retirement, I plan on being in the work force, hopefully on my own terms, for a long time to come.



Regarding out story about the tensions between bricks-and0-mortar and online retail, MNB reader Mark Delaney wrote:

I'm not sure the numbers always tell the whole story - "brick & mortar" versus "online" has many flavors. Consider this example: My wife recently visited a Ballard Design store. They offered her water, some cookies and a clean bathroom (important when you have our 7 year old in tow). She was very happy with the experience - so happy in fact that later that week she went online and ordered a few pieces. So what "bucket" does she fall in? The B&M experience clearly made the online transaction happen - and in fact for a home furnishings retailer it's likely a better model as your retail footprint can remain smaller. In all of the hype around the "retail apocalypse" we need to simply redefine the retail experience and adapt accordingly.

I wrote yesterday that I basically agreed with the premise of a Wall Street Journal story:

…that online is not going to capture every sale and put every bricks-and-mortar store out of business. Only a fool would suggest such a thing. Online could capture 10 percent of retail, or 15 percent, or 20 or 20 percent. Which doesn’t sound all that bad, but it forces me to ask the following question:

Which 10 or 15 or 20 or 30 percent of your business are you willing or able to lose? Just curious.

This prompted MNB reader Paul Schlossberg to write:

You asked the right question. The strategic response is "none." 

What happens next is related to evolutionary biology. Essentially it is retail Darwinism. Companies failing to adapt to this changing environment are at risk of not surviving. This applies equally to specific brands or lines of business in any organization. 

Management teams must first recognize that extinction is a distinct possibility. Facing that prospect, the future will belong to those companies making the decision to cannibalize their own (established) sales volume and existing channel market share. 

Who will be in the best position to cannibalize your sales? It might be a competitor. Or you can decide to do it yourself.

Published on: December 19, 2017

In Monday Night Football, the Atlanta Falcons defeated the Tampa Bay Buccaneers 24-21.