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Monday, February 05, 2018

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Monday Morning Eye-Opener: Dead Category File

by Kevin Coupe

The Washington Times has a story about how as of July 1, Best Buy no longer will carry CDs in its stores.

It will, however, “continue carrying vinyl records, but will start selling albums alongside its turntables.” Recorded music no longer will have its own special section in its stores.

Some background from the Times piece:

“CD sales have been on the decline in the U.S. for years, however, and lately the business has only generated Best Buy about $40 million annually, Billboard reported — a far cry for what used to be one of the nation’s biggest music retailers.

“CD sales in the U.S. market dropped by 16.3 percent from 125 million copies in 2015 to 104.8 million in 2016, according to an annual end-of-year Nielsen report released in early 2017. Taking into consideration CDs, cassettes and vinyl records, physical album sales at mass-merchant retail chain stores decreased by 24.5 percent during that same span, the report said.

“Nielsen’s latest annual year report, report released last month, did not account for CD sales specifically but said that total physical album sales had dropped 16.5 percent since 2016, down to 102.9 million copies in 2017. About 14.3 million of those albums were vinyl, according to the latest report.”

Life spans end. New technology takes over. Old, improved technology gets a new life. And retailers have to adapt.

And I’m not just talking about Best Buy and CDs. This is a metaphor for a process with which every retailer must deal.

It is both the circle of life and an Eye-Opener.

Playing The Long Game, & Getting Investors To Buy In

The New York Times reports on how Amazon has benefitted from the the fact that Wall Street largely has been willing to cut it slack, evaluating its “performance not based on its quarter-to-quarter profits, but on its long-term potential … In a business environment that demands, and rewards, quarterly profits and short-term strategic thinking, Amazon showed extraordinary resolve in focusing on long-term goals, somehow convincing investors to go along.”

The story notes that “Amazon has inured itself to pressure from Wall Street by ignoring it. While many chief executives devote significant time to fielding questions from investors, Amazon’s founder and chief executive, Jeff Bezos, is famously stingy about the time he spends with major stockholders. He hasn’t appeared on an Amazon earnings calls in years.”

In the end, the Times writes, “investors have rewarded Amazon for plowing its profits back into growing its businesses, whether in online retail, cloud computing or, most recently, in grocery stores, with the acquisition of Whole Foods Market.”

The feelings about Amazon is not unanimous; some investors think it is wrong that Amazon has been held to a different standard than other companies, and suggest that there is some sort of “infatuation” with Amazon at work.

But Henry Blodget, a prominent former stock analyst, suggests that “if Wall Street would allow more companies to reinvest like Amazon, it would create great benefits for the economy.”

KC's View: A lot of people argue that Amazon has an unfair advantage in the marketplace, but the simple fact is that it engineered that advantage itself by always having a long view and rarely, if ever, departing from that position.

It reminds me of the exchange from the first Pirates of the Caribbean, when Will says to Jack Sparrow, “You didn't beat me. You ignored the rules of engagement! In a fair fight, I'd kill you!”

And Sparrow replies, “Well, that's not much incentive for me to fight fair then, is it?”

Study: Smart Speaker Penetration Growing

Media Post reports on a new study by BI Intelligence saying that “The number of smart home devices continues to rise and now it’s projected that there will be 800 million in the U.S. within four years.

“The size of the smart home market is being pushed along quite nicely by smart speaker adoption, with nearly 1 billion projected to ship globally, according to a new forecast.”

While “smart home devices still appeal more to tech-savvy consumers,” the story says, they “are starting to move to average users, according to the study.”

Media Post writes that “smart speakers will gradually transform into one of many peripheral devices around the central voice assistant, according to BI Intelligence. Smart speakers are also a driver for more smart home products, since they can relatively easily control other smart devices, such as lights and thermostats, and several at time.”

KC's View: I don’t think there is much question of this. To me, the bigger question is whether latecomers to the category will be able to compete with the likes of Google and Amazon, which have gotten a significant head start.

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From WAFC...

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From The P2P Summit...

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Worth Reading: A Cantaloupe Burger, Not So Rare?

Thrillist has a story about chef Will Horowitz’s new cantaloupe burger, described as “voluptuously smoky, with the unmistakable mineral twang of dry-aging, it sends a river of juice down your chin each time you take a bite. It tugs at your teeth in the way you'd expect from animal muscle and feels like meat … It looks like meat, tastes like meat, and feels like meat, but is actually just a regular cantaloupe -- though to be fair, the cantaloupe has been halved, peeled, cured, fermented, smoked, slow-baked, dehydrated, and seared to order, in a two-day process that manages to transfigure the bulky fruit into a compact fillet the size and shape of a duck breast.”

But mostly, the story says, the cantaloupe burger is “proof of concept for a diet from the future (or a long time ago in a galaxy far, far away). And it makes you wonder: What if, instead of relying on conventional or lab-cultivated sources of animal protein, we transformed the fruits and vegetables we already have into something just as good?”

Fascinating piece, and you can read it here.

The Psychology Of An Ecosystem

In evaluating the success and efficacy of Amazon Prime, the Washington Post writes that while some people “might not actually be saving much money with Prime anymore, it actually “has mastered something much more valuable: the psychology of being a consumer in an era of too many choices.”

“Fewer than 1 percent of Amazon Prime members even consider other sites in the same shopping session, according to market research consultancy Millward Brown Digital,” the story says. “It’s hard to argue with happy customers. Prime is expensive to run, and Amazon has an unusual willingness to forgo profits for growth. But its unparalleled ability to capture our loyalty increasingly means other retailers and producers of goods feel compelled to sell on Amazon. That’s fueled worries, voiced by the Open Markets Institute’s Lina Khan and others, that Amazon is gaining too much control over online commerce. (Amazon declined to comment.)”

KC's View: The real point is that Amazon has identified an essential truth about many - even most - consumers: that rather than just being ‘the everything store,” Amazon understands that people would rather avoid trips to the store for most purchases, especially in categories where the store cannot - or at least does not - offer a compelling and differential advantage.

“Amazon has mastered the art of selling me products I just don’t want to think about,” one analyst says. I agree … and in fact, I think a lot of us have been making that point here for quite some time.

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From the National Grocers Association...

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E-conomy Beat

• The New York Times reports that Amazon has secured two patents for a wristband that tracks an employee’s every move and can use vibrations to alert the wearer when he or she is doing something incorrectly. It could, the story says, “identify every time you paused to scratch or fidget, and for how long you took a bathroom break.”

While Amazon has not said whether it plans to actually make the device and require employees to wear it, “the patent disclosure goes to the heart about a global debate about privacy and security. Amazon already has a reputation for a workplace culture that thrives on a hard-hitting management style, and has experimented with how far it can push white-collar workers in order to reach its delivery targets.”

KC's View: Why do I think that companies that use such a technology are going to get some pushback? It’ll be a lot easier to implement when there are more jobs than people, and unemployment is high.

At some point, one has to show some trust in the workforce.

If someone tried to put this wristband on me, I think I might employ some specific arm gestures that would be easily detectable.

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From Samuel J. Associates...

“Talent wins games, but teamwork and intelligence wins championships.” -Michael Jordan

At Samuel J., we don’t believe in the so-called “retail apocalypse.”

“Retail self-destruction,” maybe. But that only happens when companies and leaders don’t adapt their stores to new competitive realities, don’t create compelling customer experiences, and don’t bring together exceptional talent and build extraordinary teams that can thrive and succeed even in the toughest of times.

Is this easy? Of course not. But it is achievable … especially when you have Samuel J. Associates on your team.

At Samuel J., our value never has been greater, because we understand the connection between great talent and innovative businesses. We are uniquely positioned to put together people and organizations in a way that builds expertise, cultivates leadership, and turns business challenges into business opportunities.At Samuel J, we know how to do it in a timely fashion and exceeds our clients' high expectations. And we have the winning record to prove it.

Click here to find out more.

At Samuel J. Associates, we help you find the right talent and build the right team.

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

CNBC reports that Sears Holdings “has secured loans totaling $210 million through CEO Eddie Lampert's fund ESL Investments and other parties.” The story notes that “the parent company of Sears and Kmart stores said in January it was in talks with lenders about transactions that would strengthen its balance sheet and improve the terms on more than $1 billion of debt. It said it would consider ‘all options’ if efforts to refinance its debt fail.”

”All” options? Or just “remaining options”? Because there aren’t a lot left, I would imagine.

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From Webstop...

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From The Organic Produce Summit...

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From MyWebgrocer...

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Executive Suite

• Tesco announced that Charles Wilson, CEO of the Booker Group - which Tesco has acquired for $5.2 billion (US) - has been named to run its British and Irish businesses.

Bloomberg reports that the appointment “creates a strong No. 2 to CEO Dave Lewis,” who has been rumored to be a candidate to succeed Paul Polman, the departing CEO of Unilever.

According to the story, “Wilson will succeed Matt Davies … who joined Tesco from auto-parts and bicycle seller Halfords Group Plc just three years ago, when the supermarket operator was near rock bottom after a 2014 accounting scandal. Davies, who will leave in April, has been at the center of Tesco’s efforts to improve its image with British shoppers, and has helped oversee a recovery in U.K. sales growth.”

From The MNB Politics Desk

• In a story headlined “The CEO Who Called Trump a Racist (and Sold a Lot of Spice Mix),” The New Yorker, looks at Bill Penzey of Penzeys Spices, who long has used “the brand’s official communiques as a megaphone, devoting the first and last pages of his catalog to personal notes and op-eds. Over the years, Penzey expressed his dismay at, among other things, urban white flight, low teacher pay, and the use of Native American iconography in sports. With the advent of social media, he expanded his platform to include the e-mail newsletter and a company Facebook page. And with the election of Trump, he found an issue that nearly everyone took personally.”

Interestingly, sales actually have been improved by Penzey’s willingness to take positions on issues that have the potential for alienating half his customer base (or at least the roughly one-third of the country that is identified as Donald Trump’s base). However, the approach has brought him into conflict with his sister, Patty Erd, who owns a competing company called Spice House and was public about her company’s non-political stance.

It is a very interesting piece, and you can read it here.

Your Views: Progressions

Regarding the possibility that Amazon’s Alexa-powered smart speakers might soon start carrying advertising, MNB reader Stephanie Steiner wrote:

I finally succumbed. Sonos had a great deal on the purchase of two Echo-enabled speakers last week, and I jumped: one for the bathroom counter and one for the kitchen counter. I can use a voice command instead of wet hands straight from the shower or wet from the sink to adjust volume or change the station? I have been in heaven. But the first time I get an audible ad through a device and service that costs me money? I’m done. I’ll switch. I bought a digital assistant to create ease, not to create another interruption. I paid for a Pandora subscription was to eliminate the ads. Would we continue with Netflix if we were stuck with the same commercials as network television.

Imagine if your assistant (who I assume you pay) walked in and started every conversation with a fifteen second commercial. “Kevin, before we discuss how many spaces you utilize at the end of each sentence, let’s begin with the three thousand miles you have left on your rear tires.  Did you know that Jaime’s Tire’s and More has a special: if you buy before February tenth, you can take advantage of a buy three get one free deal? Take advantage now!” Kind of messes with your groove, now doesn’t it?
What’s next?  Amazon starts shipping us stuff we don’t need, didn’t order, and if we send it back they’ll process a refund?

Wait. I have an assistant? 

Last week, we took note that at a recent shareholders meeting, Costco CEO Craig Jelinek said that he hoped that as millennials age, they will embrace the warehouse club concept as a shopping option. “We’re hopeful that as boy meets girl, buys house, that will continue to go through their life cycle,” he said.

I commented, in part:

In today’s world, it seems limiting when you say “boy meets girl.” It also can be “boy meets boy,” or “girl meets girl.” I’m not trying to be politically correct, but just trying to acknowledge that America looks different today than it used to.

One MNB reader responded:

Thanks for calling out the odd heteronormative line by Jelinek. As soon as I read it, I had the same thoughts as you… but you explained it better than I ever could have. Good to see forward progressive thinkers in our industry.

And, responding to my Friday OffBeat review of “The Good Place,” MNB reader Mike Overschmidt wrote:

Agreed, “The Good Place” is really forking funny.

Side note: my wife is convinced we're living in the Bad Place. But enough about politics.

From The MNB Sports Desk

The underdog Philadelphia Eagles defeated the New England Patriots 41-33 last night in Super Bowl LII, led by second-year coach Doug Pederson and quarterback Nick Foles, who started the year as a reserve and just a couple of years ago was contemplating retirement.

KC's View: And in even more important sports news, spring training begins in about a week. Yippee.

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"Good Is Not Good When Better Is Expected"

In this fast-paced, interactive and provocative presentation, MNB's Kevin Coupe challenges audiences to see Main Street through a constantly evolving technological, demographic, competitive and cultural prism.  These issues all combine to create an environment in which traditional thinking, fundamental execution, and just-good-enough strategies and tactics likely will pave a path to irrelevance;  Coupe lays out a road map for the future that focuses on differential advantages and disruptive mindsets, using real-world examples that can be adopted and executed by enterprising and innovative leaders.

"Kevin inspired our management team with his insights about the food industry and his enthusiasm. We've had the best come in to address our group, and Kevin Coupe was rated right up there.  He had our team on the edge of their chairs!" - Stew Leonard, Jr., CEO, Stew Leonard's

Constantly updated to reflect the news stories covered and commented upon daily by MorningNewsBeat, and seasoned with an irreverent sense of humor and disdain for sacred cows honed by Coupe’s 30+ years of writing and reporting about the best in the business, "Good Is Not Good When Better Is Expected" will get your meeting attendees not just thinking, but asking the serious questions about business and consumers that serious times demand.

Want to make your next event unique, engaging, illuminating and entertaining?  Start here: Or call Kevin at 203-662-0100.

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Just a reminder ... Jackson Jeyanayagam, CMO of Boxed, joins Tom Furphy and Kevin Coupe to talk about his company's competitive posture, unique value proposition, and focus on family-friendly values, as well as his experience as head of digital marketing at Chipotle during its food safety crisis. Plus, Tom and Kevin discuss Amazon’s integration of Whole Foods, and much more, in this inaugural edition of The Innovation Conversation Podcast.

This podcast can be played below, or can be accessed and subscribed to on both iTunes and GooglePlay.

This Innovation Conversation Podcast is sponsored by ReposiTrak, and brought to you by GMDC.

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MNB Podcast: Assembling the E-commerce Jigsaw Puzzle

“Content Guy” Kevin Coupe sits down with Barry Clogan (pictured at left) - a veteran of the e-commerce wars with his share of battle scars - the 2018 National Retail Federation Big Show, to talk about how the fast evolving e-commerce segment is creating a growing chasm between retailers that “get it” and those who don’t. The focus is on customer acquisition, and the importance of focusing on total customer value as opposed to sales and transactions, and the conclusion is that retailers are running out of time to make the critical moves to keep them relevant and successful.

Content Guy’s Note: In the interest of full disclosure, I should note here that Barry currently is president of Retail Solutions at MyWebGrocer, but also spent five years at Tesco, where he led its online grocery rollout across eight countries. I thought his perspective would be valuable, and worth sharing with the MNB community. It was only later that MyWebGrocer stepped in and asked to sponsor it … which didn’t particularly matter in terms of content, because at no point in the interview did we talk about MyWebGrocer. This is not a commercial, or even an infomercial … but I wanted to be completely transparent about it. So, enjoy…

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The Innovation Conversation Podcast - Episode 2

Marty Ramos, Microsoft’s Chief Technology Officer for Retail, Consumer Products & Services, discusses with Tom Furphy & Kevin Coupe the “fire hose” of technology options available to retailers and how to prioritize among them. Ramos says it is all about BILL - basket size, inventory, labor and loss prevention - and making sure that technology addresses one or more of these issues. And, he talks about the retailers making the biggest, most innovative strides. Plus, Tom and Kevin talk about the challenges of the “last mile.”

This podcast can be played below, or can be accessed and subscribed to on both iTunes and GooglePlay.

This Innovation Conversation Podcast is sponsored by ReposiTrak, and brought to you by GMDC.

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