business news in context, analysis with attitude

Published on: April 16, 2018

by Kevin Coupe

MNB readers may remember how. a little over a year ago, French food retailer Monoprix released an online video that mimicked the Amazon Go video that had gotten a lot of attention in drawing attention to its just-announced checkout-free format. Monoprix’s point was it had been doing a version of what Amazon was offering for years, and that originality and imagination count for more than technology.

At the time, I wrote:

Monoprix makes it clear that if you want to compete with Amazon, sometimes you have to come at the problem from an entirely different direction ... and that it is critical to have different and defining strengths. (It also helps to have a sense of humor, which the Monoprix folks clearly have, and an ability to execute speedily. No wasted time in crafting this response.)

Well, the folks at Monoprix have done it again, with this new video, which you can see here this morning.

I’m not going to tell you anything about it other than to say it is very clever, well-made, and totally worth sticking with until the end, when it makes its salient and Eye-Opening point.

Enjoy.

Published on: April 16, 2018

The New York Times offers a bit of commentary about the state of retail, which often looks dismal, but, the piece suggests, actually may be rosier than one might imagine:

“Traditional retailers have already made meaningful progress addressing one of their three biggest problems — too many stores — and have begun to address the other two: the high level of debt on their balance sheets and the rise of digital retailing.”

The authors of the piece, Joel Bines and David Bassuk, global co-heads of retail consulting at AlixPartners, write:

“We see the innovative experiments going on in retail today — the ‘experiential’ stores appealing to those craving experiences as much as things, the ‘shoppertainment’ malls combining entertainment with spending, the back-to-the-future ‘local’ retail that eschews universal brands in favor of more curated offerings — and this gives us even more confidence.

“Don’t bet against retail; the destruction it’s going through now is, as in the past, of the creative variety.”

Published on: April 16, 2018

Bloomberg reports that Walmart-owned Jet’s site traffic declined about 60 percent last month when compared to the same period a year ago, while Walmart’s site traffic was up about five percent during the same period.

The difference in the two sites’ fortunes may be at least in part traceable to the fact that Walmart has been spending more money upgrading and marketing its eponymous online efforts, and less on Jet.

At the same time, the shifts come “as Walmart revamps its main website and looks to lure more upscale customers there with new apparel brands, expanded home-delivery options and a partnership with department store Lord & Taylor. This could draw even more shoppers away from Jet, whose ‘smart cart’ shopping feature - which provides discounts for ordering more items or forgoing returns - has already been adopted by walmart.com."

Jet’s position seems to be that site traffic is an “imperfect” metric, and does not take into account the fact that Jet’s positioning over the past months has been to focus it on “key urban markets” such as New York and San Francisco where the Walmart brand might meet some cultural resistance.

Published on: April 16, 2018

The Wall Street Journal has a story about how Levi Strauss & Co., having introduced automation to its factory floors by using lasers to distress and create rips and holes in jeans, now is bringing robotics to finance functions within the company.

“We are introducing bots where it makes sense,” CFO Harmit Singh tells the Journal. “The idea is not to eliminate jobs. We are going to upskill employees and have them spend more time on analysis.”

Published on: April 16, 2018

Reuters reports that the US Supreme Court is scheduled to hear a case on Tuesday that could “determine whether states can force out-of-state online retailers to collect sales taxes.”

The state of South Dakota is asking the court to reverse a precedent set by the Court in 1992, when it ruled that “states cannot require retailers to collect state sales taxes on purchases unless the businesses have a ‘physical presence’ in the state … The state, appealing a lower court decision that favored Wayfair Inc., Overstock.com Inc. and Newegg Inc, is being supported by President Donald Trump’s administration.”

If the Court sides with South Dakota, the story says, it “could help small brick-and-mortar retailers compete with online rivals while funneling up to $18 billion into the coffers of the affected states, according to a 2017 federal report.”

The Reuters piece notes that the case is being heard against the backdrop of an ongoing battle between the Trump administration and Amazon; President Trump has accused Amazon both of taking advantage of the US Postal Service and paying too little for its delivery service, and of not paying enough tax.

Amazon is not involved in the South Dakota case.

Published on: April 16, 2018

Starbucks CEO Kevin Johnson apologized over the weekend after two African American men were arrested at one of his company’s Philadelphia stores and charged with trespassing - even though they said they were just waiting for a friend to arrive before ordering.

The friend they were waiting for - who is white - reportedly has corroborated their story.

The police were called by Starbucks employees, who told police responding to a 911 call that the men had been told that the bathroom only was for customers, and that they refused to leave when asked to do so.

Reuters reports that Johnson has promised an investigation and expressed chagrin at the video of the arrests that were shot by customers and posted online, describing it as “very hard to watch. The actions shown in the video, he said, “are not representative of our Starbucks mission and values … The basis for the call to the Philadelphia police department was wrong.” And, Johnson has promised a system-wide effort to retain store employees to make sure this doesn’t happen again.

Reports suggest that the police did nothing wrong, and that they behaved professionally when dealing with the men and appropriately in responding to the call from store employees.

Published on: April 16, 2018

The Washington Post has a story about how Target seems to be going back to its “cheap chic” roots, rolling out “limited-time collaborations with established luxury brands such as Missoni, Alexander McQueen and Jean Paul Gaultier, as well as up-and-coming designers including Jason Wu and Prabal Gurung.”

The goal, the story says, is to turn “around the retailer’s image” and help “establish it as a higher-end alternative to competitors such as Walmart.”

There is a problem though, the Post writes - though it isn’t Target’s.

“Retail analysts say that while the big-box chain has­­ boosted its own cachet, the tie-ups are less fruitful for premium brands looking to attract aspirational shoppers. Sure, partnering with Target may boost brand recognition and awareness in some circles, but to what end? Once the items sell out, often in days or weeks, it’s unlikely, industry insiders say, that Target shoppers will suddenly begin buying Victoria Beckham trousers at Saks Fifth Avenue for 25 times the price. (A version of the designer’s flared trousers sold for $40 at Target last year. A similar item at Saks Fifth Avenue is marked $1,010.)”

Published on: April 16, 2018

The Wall Street Journal this morning has a story about the battle for public opinion about new genetically modified foods that is taking place even before these new gene-edited foods reach the marketplace.

An excerpt:

“Proponents including scientists and agriculture-industry executives say gene editing in plants could transform agriculture and help feed a growing global population. Organic farmers and natural-food companies say it may pose risks to human health and permanently alter the environment by spreading beyond farms.

“The agricultural industry is desperate to avoid a repeat of the acrimonious and costly battles it fought over the genetically modified crops currently on the market, even though authorities such as the Food and Drug Administration and World Health Organization have deemed them safe. Seed companies and farm groups have spent millions of dollars on campaigns promoting the benefits of biotech crops, while fighting labeling requirements and proposals to block their cultivation.”

You can read the entire story here.

Published on: April 16, 2018

• MediaPost reports that ”Forrester’s latest U.S. mobile and tablet commerce forecast for 2017 to 2022 estimates that Americans spent $153 billion on retail products using their mobile devices in 2017 … The study suggests that smartphone retail sales will grow from $100 billion to $209 billion between 2017 and 2022.”

However, the study also suggests that the sales volume being done via these mobile devices leaves a lot of room for improvement: “When consumers were asked in a survey how often they purchased physical goods on a mobile phone, 46% in 2017 said they never did -- up from 41% in 2016. About 6% said they purchase something daily -- down from 11% in 2016. Weekly purchases for each year remained flat at 10%, along with purchases at least monthly at 16 for each of the two years cited.”

The story makes it sound like people use their mobile devices for referrals as opposed to actual purchases: “Google estimates there are tens of millions of consumers asking their mobile phones ‘where can I buy.’ In fact, ‘where can I buy’ mobile searches on Google grew about 85% in the past two years.”

Published on: April 16, 2018

• Business Insider reports on how Walmart’s capital plans for the coming year include “remodeling 500 stores and opening 20 new stores across more than two dozen states as part of an $11 billion spending plan.

According to the story, “The biggest share of the remodels will happen in Florida and Texas, where the company is spending a combined $477 million to open 14 new stores and remodel 82 others. Shoppers will see many changes including wider aisles, shorter shelving, new signs and flooring, and a redesigned electronics department with interactive displays.”

Business Insider also notes that “the retailer is bringing online grocery pickup to 1,000 additional stores this year, adding pickup towers for online orders to another 500 stores, and expanding Mobile Express Scan & Go, which allows shoppers to scan and pay for items with their smartphones.”

Published on: April 16, 2018

• USA Today reports that Indiana-based Rose Acre Farms has voluntarily recalled more than 200 million eggs because of a possible linkage to salmonella outbreak that may have caused almost two dozen illnesses.

According to the story, “The eggs were distributed from the farm in Hyde County, N.C., and reached consumers in Colorado, Florida, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Virginia, and West Virginia through retail stores and restaurants. They were sold under the brand names Country Daybreak; Crystal Farms; Coburn Farms; Sunshine Farms; Glenview; Great Value; as well as at Walmart and Food Lion stores.”

Published on: April 16, 2018

• The Grocery Manufacturers Association (GMA) announced that it will present Hall of Achievement Awards later this year to Fred Morganthall, the retired EVP of Kroger and president of Harris Teeter, and Irene Rosenfeld, the retired chairman and CEO of Mondel z International Inc.

Published on: April 16, 2018

Milos Forman, the Czech director who emigrated to the US in the late sixties and during his career was responsible for One Flew Over The Cuckoo’s next and Amadeus - each of which won Best Picture Oscars as well as acting awards for their leads - has passed away at age 86.

In those films - as well as in less well received efforts such as the film version of Hair, Ragtime, The People vs. Larry Flynt and Man on the Moon - Forman was sympathetic to characters who challenged the establishment, who saw the world through a different prism, and who believed in protest as an ultimate expression of character.

Published on: April 16, 2018

Got the following email from MNB reader Jim Swoboda:

Thank you for sharing the photos of the Seattle Starbucks Reserve store. As a diehard Starbucks customer, I look forward to seeing it, or another soon. Having said that, I must share a recent experience.

I have been waiting and waiting for the Starbucks Clover system to show up where in live in Michigan. To date, I am still waiting. Having the ability to try some of the worlds greatest coffee on a single cup basis is intriguing. Last week, in New Orleans, I finally found a store with the Clover. So, I tried the Jamaican Blue Mountain brew by the cup using Clover. I must confess to being underwhelmed. And it likely is more related to the human process than the Clover process.

The young man who prepared my cup opened a bag of coffee and proceeded to walk to the common grinder where they grind bags of coffee. That’s an immediate problem of course, as the Jamaican Blue Mountain was now mixed with whatever grounds that were still in the grinder. No effort was made to brush out the grinder or the chute. Then, the grind was put into the Clover, which candidly, looked dirty and similarly contaminated. So, I ended up with an expensive cup that candidly, fell well short of expectations.

I contrast that with a little coffee shop downtown by me which makes all their coffee by the cup. Great care it taken in grinding in a clean grinder, and then carefully, hand pouring 205 degree water over the fresh grind. The beans have been freshly roasted. The resulting cup is indeed a special treat. The reason for sharing this is if Starbucks wants to up their game and truly provide the ultimate coffee experience as the Starbucks Reserve label would suggest, they need to up their delivery game as well to match the promise with the result.

Seems to me that Starbucks really wants to make a successful play in the Reserve/Clover/Roastery space, it cannot make these mistakes.

Now, I’d bet that this would never happen at the Roastery or the Reserve stores - these are showplaces for the brand. But the magic really happens when the education of associates goes right down throughout the organization. Mistakes happen, but sloppiness ands inattentiveness can kill a brand experience.



We had a story last week about how some so-called experts are suggesting that the supermarket industry ought to take up the slack that is being created by the demise of Toys R Us. MNB reader George Denman responded:

Another factor in the Toys 4 Us debacle is that Amazon has focused less on competing with them but making their stores irrelevant, a core tactic from Blue Ocean Shift. E-commerce now covers 24% of toys sold with the vast majority going to the Big A. Consumer electronics and Footwear are the only 2 categories with greater ecommerce shifts. By contrast CPG has only seen a 4% shift to commerce. Why in the world would grocery stores want to play in a shrinking business model?

Agreed.



On the subject of sexual harassment, one MNB reader wrote:

I worked 40 years at a large CPG company, mostly in supervisory roles. We had ample training (including anti-sexual harassment) on a yearly basis. Any employee that was not aware of what was/was not permissible only had themselves to blame. Did this training stop all forms of harassment? Unlikely. But, this training coupled with what you mention “There need to be hard and swift penalties” made a tremendous difference in our culture.  It’s unfortunate this needs to be legislated, but for companies/organizations without these practices already in place, it probably must be.



MNB wrote the other day about how a product called Soylent - which we said was one of the worst names for a food product, ever - is getting distribution at Walmart.

One MNB reader observed:

Back in college, one of my good friends ordered a ton of Soylent and we all tried it as a space-agey nutrient drink. I think we had chocolate flavor. It was the nastiest thing that I have ever tried. It was a chalky powder that you mixed with water or milk to make a protein shake type drink. Now, this was probably four years ago at this point, so they may have improved the taste, but nothing will ever make me interested in purchasing Soylent.

And you’re right: Soylent is a terrible name.

MNB reader Bill Bolton had a similar take:

I agree with him, that Soylent is the dumbest name for a food product. In my minds eye , I can still see Edward G Robinson going on the final trip.



We posted a Walmart commercial the other day that focuses on easy reordering, and one MNB reader responded:

Kudos to Walmart for trying KC. But until Walmart can deliver an item I order late on a Friday by Sunday like Amazon, they have a ways to go.

Agreed.




Finally, thanks to all the MNB readers - and there were dozens - who wrote in about the fact that a combination of mayonnaise and ketchup isn't just an ethnic Latino product, but also is known in various places as either “fry sauce” or “Russian dressing.”

Gotcha.