business news in context, analysis with attitude

Published on: March 29, 2018

This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, Kevin Coupe here, and this is FaceTime with the Content Guy.

One of the things we talk a lot about here on MNB is how critical it is for bricks-and-mortar stores - if they want to compete effectively with each other, and with e-commerce companies - to provide a compelling experience. They have to have experiences that used to be fairly mundane and inject them with energy and make them special.

I got another reminder of how important this is the other day when I was in Grand Rapids to speak at Western Michigan University’s annual Food Marketing Conference.

When I landed at the Grand Rapids airport, I did what I usually do in such circumstances - I went on the Lyft app and requested a car. When it came, I sat up front with the driver and we ended up having a great conversation. It so happened that he was a local independent food retailer who drives a Lyft car to make extra money, and we talked about the industry, the conference and his stores.

One of the things he bemoaned was how much trouble he has in hiring good people, and he said that there are times he has to hire six people just to get one good one. I respectfully suggested that maybe he needed to ask different questions. But it was a good conversation, and a lot better than taking a cab.

Even better was the Lyft I took from the hotel back to the airport a couple of days later. The young woman who drove the car was a delight - she told me about being born in South Korea, the daughter of an American serviceman and what she called “a lady of the night.” She was abandoned, living on the streets and stealing food as she got older, and then was arrested - which ended up being lucky, since a woman there took pity on her and decided to do her best to get her adopted rather than sending her back into a system that probably would have ended with her being in her mother’s profession. She ended up being adopted by an American couple, and has enjoyed a good life in Michigan.

It was an amazing story … and her feelings of gratitude about the life she’d been able to lead, and hoped to lead in the future, just made me feel good about the kind of country we can be - welcoming and offering possibilities to anyone who wants to come here.

And again, I was grateful to Lyft for making it happen.

It used to be that getting into a cab was nothing special, but the creation of services like Lyft has personalized it and elevated it to another level. The ride isn’t just a ride … it is a story.

That’s an important lesson for any retailer … or at least any retailer that wants to transcend the ordinary. Shopping can be just shopping, or it can be turned into a narrative that touches consumers hearts and minds. That’s a move worth making.

That’s what is on my mind this morning. As always, I want to hear what is on your mind.

Published on: March 29, 2018

Bloomberg has a story about Walmart’s ownership of the Vudu video-on-demand service, which should be a potent weapon in its battle against the Amazon ecosystem - except that it has owned it for eight years, and users spend an average of just 1.9 hours a month on the platform, compared to 25 hours a month on Netflix.

“With a library of 5,000 films from all the big studios available at the
press of a button,” Bloomberg writes, “Vudu promised to ‘revolutionize’ the home-movie experience when it debuted in 2007. It hasn’t worked out that way.”

The story notes that the Vudu acquisition was designed to give “Walmart digital cred, but the primary rationale for the 2010 deal was to provide insurance against declining in-store sales of DVDs. Walmart bet that video buffs would continue to buy and rent loads of movies -- they’d just move their titles to a digital shelf, or library, that Vudu would create and maintain for them.”

But the problem is that for “Walmart to seriously compete, it would have to devote resources -- both creative and financial -- toward providing original Walmart-branded content as Netflix, Amazon and Hulu have all done.”

Published on: March 29, 2018

Bloomberg reports on how Amazon is testing out a new approach to the handyman/housekeeping business, three years after it launched a marketplace to connect consumers with people who can help them with such tasks.

Now, the story says, “Amazon is quietly hiring house cleaners in Seattle as direct employees. The online retailer is swapping the low cost of contract workers for the greater control of employing its own people. Doing so puts it on the hook for things like minimum wage, workers compensation and overtime pay. But it also lets Amazon determine how the workers are trained, which cleaning products they use and how they organize their schedules.”

Published on: March 29, 2018

Axios reports that at a time when much of America’s governmental apparatus is focused on Facebook, it appears that President Donald Trump is preoccupied with another technology giant.

Amazon.

According to the story - which the White House has dismissed as inaccurate - “Trump has talked about changing Amazon’s tax treatment because he’s worried about mom-and-pop retailers being put out of business.” One source says that Trump has “wondered aloud if there may be any way to go after Amazon with antitrust or competition law.”

Axios writes that “Trump’s deep-seated antipathy toward Amazon surfaces when discussing tax policy and antitrust cases. The president would love to clip CEO Jeff Bezos’ wings. But he doesn’t have a plan to make that happen.

“Behind the president's thinking: Trump's wealthy friends tell him Amazon is destroying their businesses. His real estate buddies tell him — and he agrees — that Amazon is killing shopping malls and brick-and-mortar retailers.” And, “Trump tells people Amazon has gotten a free ride from taxpayers and cushy treatment from the U.S. Postal Service.”

And, of course, there is the fact that Bezos owns the Washington Post, which has been aggressive in its reporting about the Trump administration.

Discussion of the Axios story caused Amazon’s stock to drop more than four percent yesterday, and now is a relative bargain at more than $1400 a share.

Published on: March 29, 2018

• The Washington Post has a story about a new federal regulation, scheduled to go into effect next week, that could add to the cost of goods in the US.

The rule “requires any truck traveling more than 150 miles a day to have an electronic logging device installed or the truck’s owner will face fines and could potentially lose its license to operate. The idea is to replace the manual logbooks that truckers have kept since the days of yore with something more real time and automatic … The devices will track all hours of a truck at work, even while it’s going to pick up cargo, which means less time could be available for the actual delivery before a break is required. In addition, the time logged by the devices would include when a driver is waiting - sometimes for hours - for cargo to be taken off a truck.”

And so, while supporters of the regulation argue that it will made the roads safer, there is a sense that compliance issues will add to the cost of anything shipped by truck. Which is most stuff.

Published on: March 29, 2018

• Kroger announced that Rebekah Manis, its corporate controller for merchandising, has been promoted to director of investor relations. Manis succeeds Kate Ward, who has been promoted to president of Kroger Personal Finance.

Published on: March 29, 2018

Got a lot of email about Kate McMahon’s column yesterday about Mark Zuckerberg and Facebook.

MNB reader Terry Pyles wrote:

Brilliant!  

Ya know, I'm a big fan of yours.  I look forward to your columns every week. Today you hit a home run with your piece on Mark Zuckerberg, the accidental business tycoon.  

I tried Facebook for a cup of coffee many years ago.  Two reasons our relationship didn't last: 1.) I was dumb enough to accept friend requests from my then 20-something kids. TMI!, and 2.) Facebook's security left me very nervous. I jettisoned my account, but found out one can never really delete that account.  Kind of like a certain type of virus; you can force it into dormancy but it never really goes away.  They keep your account inactive, but it's always just a password entry away from re-activation. A hacker might still be able to get in.

I believe Mark Zuckerberg is the Dr. Frankenstein of the tech world. He had the smarts on the tech side to create this monster, but was ill equipped on the business side right out of the blocks. But he was (is) also too arrogant to admit it. The monster got away from him, became too big for him to control. At no point, though, was he conscious of the fact that Facebook IS indeed a business, not just a fun little social platform.  Moreover, he was not conscious of the fact that as CEO he IS indeed a business man, and as such responsible for any and all actions of his company.

Kind of reminds me of the Tom Hanks character in the movie Big.

Anyhow, thanks for a great column.  I always enjoy your provocative, tell-it-like-it-is style.

From MNB reader Steven Litt:

Thanks for covering this key topic. We raise it often at Seneca College, starting with J&J Tylenol and - decades later - Maple Leaf’s fast mea culpa directly from the top (Michael McCain after a listeria outbreak).

Sadly, there are many examples of ‘waffling’ responses - dithering or ham-handed executives at Abercrombie, Target, Equifax, Uber, Netflix and even a more recent team at J&J dragging their feet and obfuscating about baby powder. 

Verdict is still out IMO on how Samsung handled the flaming phone- but my students (the Target group) seem to give the phone maker an okay grade. 
Wonderful, worthy work- pls keep feeding readers your insights!

And from MNB reader David Spawn:

RIGHT ON!




Also got a lot of email about Walmart’s patenting of drone technology that would help consumers find products in its stores.

MNB reader Bruce Christiansen wrote:

Given WalMart’s admitted difficulty staying in stock, it seems to me using them (drones) to identify out of stocks or near out of stocks is not only easier/safer but a better deployment of this emerging technology. Have all the products and consumers have fewer questions and frustrations.

MNB reader Glenn Cantor wrote:

I always find it amusing when a store has wayward birds flying around inside.  They know enough to keep out of the way of the people.  Having in-store drones is a an accident waiting to happen.  Instead, how about retailers just providing all of the product and information shoppers may need at the shelf?

From MNB reader Chris Utz:

And if the drone happens to dip a bit too low, I could get a free haircut.  Or at the very least, a new wind-blown hair style…
 



Finally, we had an email yesterday from MNB fave Glenn Terbeek in which he wrote about how the best kinds of supermarkets - locally oriented, customer-focused - will be great places to work for young people.

This prompted MNB reader Tom Robbins to write:

Kudos to Glen Terbeek ! I believe his comments are spot on and the best and brightest will find the Supermarket Industry is loaded with opportunity for those who are willing to “think” as well as work.

But another MNB reader wrote:

Kevin, can I get some of what Glen’s smoking? (And, in 50+ years, I’ve never smoked, not even one cigarette…)

A career in food industry requires starting at a point where (the good) changes Glen suggested are unlikely to happen for the average new hire.

Maybe the industry has to think of and use new hires differently…?

Published on: March 29, 2018

”Baseball is the most important thing that doesn’t matter.”
Robert B. Parker

The Major League Baseball season begins today, which means that life begins again.