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Thursday, December 06, 2018

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FaceTime with the Content Guy: Silent Nights

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.

’Twas less than three weeks until Christmas
And I wandered the mall.
And saw nobody there.
Almost nobody at all.

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

The other day I went with Mrs. Content Guy to the Stamford Town Center, the mall closest to our house in Connecticut. I have to be honest - I had some trepidations about going on an evening so close to Christmas, because I hate dealing with crowds.

No reason to worry. The joint was pretty empty. Even the Apple Store was quiet, and that spells disaster.

As I walked around, I noticed that there were a bunch of empty stores. There also were a lot of stores that looked more like pop-up shops, which meant they were designed to fill in spaces that otherwise would’ve been empty.

Interestingly enough, there also were a number of stores that had the gates pulled down, with signs saying, “Back in 10 minutes.” Which tells me that these stores didn’t have enough help to stay open while one staffer went to the bathroom or to get some dinner. That may be because these stores can’t find help, or because they don’t want to invest in help. Either way, not good for the shopper.

Listen, I don’t want to beat a dead horse here, but to me the Stamford Town Center is just a metaphor for the problems that may be facing lots of bricks-and-mortar retailers and malls. If you don’t create a differentiated offering that compels people to get off their rear ends, into their cars and into the store - an offering that is both relevant and resonant - then, to be honest, you’re screwed. You have no shot. Turn out the lights, the party’s over.

The Stamford Town Center has nothing going on, and the days ahead look anything but merry and bright.

The Grinch could steal this place, and nobody would notice.

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

Thursday Eye-Opener: In Praise Of Robot Servers

by Kevin Coupe

We’ve had a number of stories about robotics lately, from Kroger’s deal with Ocado to build robotic warehouses, to Walmart’s use of robotic janitors to clean its stores.

I don’t blame folks for thinking that this creates potential problems for actual human labor. Visions of The Terminator dance in people’s heads, though I tend to think more about Data from “Star Trek: The Next Generation.”

But … sometimes reality comes along and smashes all your expectations and assumptions.

Which is what happened yesterday when I got a note from MNB reader Tom Redwine, who referred me to a story he’d seen on a site called NextShark.

It seems that in Japan, there is a company that has been testing out the use of robots in a restaurant … except that in this cafe, they’ve hired paralyzed people to control the robots from their beds and chairs, even from their homes. The controls are customized for people’s specific disabilities, and the system allows them to interact via then robots with society, not to mention earn a paycheck.

To this point, it’s just been a crowdfunded test, one that ends tomorrow. But the folks running the cafe hope to open such a business on a full-time basis in about a year.

The story is definitely an Eye-Opener. And I am gobsmacked.

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From the National Grocers Association...

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Kroger Q3 Digital Sales Rise 60 Percent

Kroger Co. this morning said that its third quarter digital sales were up 60 percent, a reflection of CEO Rodney McMullen’s comment that “"Kroger is transforming our business model … moving from a traditional grocer to a growth company with both a strong customer ecosystem that offers anything, anytime, anywhere, and asset-light, high-margin alternative partnerships and services.”

Those partnerships, of course, include this week’s expansion of an existing relationship with Walgreen, which allowed customers to order groceries from Kroger online and then pick them up at a Walgreen drugstore, into a new concept called Kroger Express that has more than 2,000 fresh and packaged grocery products sold in Kroger sections inside Walgreen stores. (Kroger Express is currently in a 13-store test in northern Kentucky.)

Kroger said that its Q3 net income fell to $317 million, from $397 million during the same period a year ago, on total sales that decreased 0.3 percent to $27.67 billion. Q3 same-store sales, excluding fuel, were up 1.6 percent.

KC's View: The next few years likely are to be an unsettled time at Kroger - and that’s a good thing. It is investing in new partnerships and technologies (like Ocado robotic warehouses), and trying to reshape its supply chain and consumer offering into something relevant to mid-21st century consumers.

Dollar General Expands Store Count, Food, Fresh Produce Selection

The Wall Street Journal reports that Dollar General “is betting that more food choices, including fresh produce, will boost its revenue and traffic as it looks to expand in rural and metro areas lacking grocery-store options.”

CEO Todd Vasos says that as the company opens 975 new stores, remodels 1,000 and relocates 100 stores during the coming year, it wants to “develop these additional formats to be able to move into certain demographics across the U.S. where a one-size-fits-all mentality is really not the way to be productive and to make the most of your real estate portfolio.”

Vasos says that he believes that Dollar General “can ‘drive a tremendous amount of traffic’ by opening stores that offer refrigerated products and produce in food deserts, areas where access to affordable and healthier food options is limited.” He also says that “there is still an opportunity to add 12,000 to 13,000 stores in the continental U.S. Dollar General operated 15,227 stores in 44 states as of Nov. 2.”

KC's View: The pace of growth that Dollar General is projecting is extraordinary, and if the company is able to effectively match that with a stronger value proposition in terms of food and fresh produce, it has the potential to have an enormous impact on the competitive landscape.

Dollar General has a pretty specific narrative, and it can throw a lot of shade at retailers with a less compelling story to tell its shoppers, or a more mediocre value proposition. Plus, when the economy moves into a downturn - which it inevitably will, with many economists suggesting it will come in 2019 or 2020 - Dollar General, in a lot of markets, may be well positioned to take advantage.

These folks have the potential of being really scary.

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From Export Solutions...

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From WAFC...

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Data & Delivery Are Toppings For Pizza Hut’s New Strategy

CNBC has a story about how Pizza Hut, hoping to learn more about its customers, is acquiring QuikOrder, described as “an online ordering software and service provider for restaurants” with which it had a previous vendor relationship - about half of its US sales were processed through its platform.

The CNBC story notes that Deloitte says that “customers who order online increase their spending by 20 percent,” and that Yum Brands, which owns Pizza Hut, believes that “greater access to their data could help Pizza Hut increase sales even more by specifically targeting customers during the online ordering process.”

Data services, “whether they incorporate delivery or not, reap the benefit of having full access to consumer data,” the story says. “ With that data, those companies learn what customers order, when they order it, how often they are using the platform and can leverage it to bolster sales or lure in diners from other services.”

Indeed, the Financial Times has a Pizza Hut story along the same lines - it quotes CEO Greg Creed as saying in an interview that “the future of pizza is in delivery and carry out,” and that within five years, “sit-down restaurants would account for only about a quarter of Pizza Hut’s global outlets — down from more than 40 per cent at present.”

Pizza Hut, the story says, “is planning to shift towards takeaway-centric outlets through new openings and so-called relocations — shutting restaurants and opening delivery stores nearby.”

KC's View: It won’t affect every retailer, but two trends mentioned in these stories intrigue me. One is the move away from restaurants to pickup/delivery, and the other is the idea that average transactions are higher when orders are placed online.

These probably aren’t isolated to the pizza business, but rather reflect broader consumer behaviors that will carry over to other segments. Leaders in other segments have to ask themselves, “How are we repositioning and preparing ourselves for these customers?”

Ikea Takes Manhattan With Small Store Strategy

It was just a week ago that we wrote about how Ikea was testing one of its new small-format stores in Warsaw - a 54,000 square feet unit that is 25 percent of the size of a standard Ikea store.

Now, CNBC reports that Ikea has picked a location for its first small store in Manhattan - on the Upper West Side, next door to Bloomingdale’s.

According to the story, “Ikea's move into Manhattan comes as many retailers — including Target, Kohl's and Macy's — are shrinking their existing full-size stores or experimenting with opening up smaller-format locations in densely populated markets such as Manhattan, Los Angeles and Chicago. As more and more shoppers are turning to the internet to ring up purchases, companies are finding they don't need as much real estate.”

KC's View: Can’t wait to see it, if only because I am curious about how a retailer that is almost definitionally a big-box concept picks and chooses for a smaller footprint. Ought to be lots of lessons there for other retailers. I’ve long argued that retailers specializing in 150,000 sq. ft stores ought to be thinking in terms of 75,000 sq. ft, that retailers specializing in 80,000 sq t. stores ought to planning 40,000 sq. ft. units, and so on.

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From Portland State University...

Here ya go!

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Airports Turn To Vending To Revitalize Retail

The Wall Street Journal has a story about how, since airport retail sales have fallen 10% since 2012, airports now are turning to vending machines as a way of generating new sales.

“Vending machines selling clothing, makeup, electronics and high-end foods are cropping up at U.S. airports where officials are competing for passengers with improved amenities,” the story says - using as one example a Uniqlo brand vending machine that sells down jackets to people flying from Southern California to colder climes for which they may not have appropriate attire.

“Airports are using vending machines to test the appeal of more unusual products, airport operators and vendors say,” the Journal writes. “ The machines can be stationed in unused corners of an airport and make sales around the clock. Some new machines have touch screens and robotic suction arms to deliver expensive products.”

Other examples:

“At some airports, vending machines offer local flavor. Ted Drewes, a St. Louis frozen-custard institution, has been selling $6 ‘concretes’ - custard so thick you can turn it upside down without spilling - from machines at St. Louis Lambert International Airport since mid-2015. Travelers bought 15,000 concretes in the machines’ first year and sales climbed 25% the next year, according to AVendCo, which operates the four frozen-custard machines.

“At Pittsburgh International Airport, a vending machine operated by Arcadia Publishing sells books on the history of local neighborhoods for about $20.

“Other machines offer products that are hard to find elsewhere, including Buffalo Wool Co., which sells gloves, beanies, socks and other goods made from bison wool online and at trade shows. Co-owners Ron and Theresa Miskin spend a month in Alaska each year selling at the state fair, so they knew they could find customers willing to pay $95 for bison-wool gloves at the Ted Stevens Anchorage International Airport.”

KC's View: This story, in its own way, has a lot in common with other MNB stories from this morning, about businesses looking or new and different ways to reach out to - and understand the needs of - an evolving consumer base.

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From Samuel J. Associates...

"It’s a bad time to be in the business of selling groceries, and the headlines are as bleak as you’d expect: "The Retail Apocalypse Is Coming for Grocery Stores" ... "Grocery Retail ‘Bloodbath’ Is Here" ... Conversely, it is a great time — arguably the best time ever — to buy groceries."
- New York Magazine/Grub Street

At Samuel J.Associates, we have a response to this assessment:


We think it is a great time to be selling groceries, whether you are a retailer or a supplier. That’s because a more educated and demanding consumer, no matter the demographic, will reward businesses that are innovative, disruptive, and in touch with what people need, even if they don’t know they need it.

And, we know this: Those businesses require, and are fueled by, great people.

People who don’t just get the job done, but who set the tone in an organization, establish cultural and business priorities, who build teams, and who are able to not just adapt to competitive realities, but see the future and thrive in it.

And yes, ignore dire warnings about a "retail apocalypse" and see opportunities.

At Samuel J. Associates, we have a winning record of connecting great talent and innovative businesses ... as well as innovative talent with great businesses. We exceed your expectations so that you can do the same thing for your customers.

No bull.

Click here to find out more.

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E-conomy Beat

Digiday reports on how Amazon plans to combine its two marketplaces - “one for first-party sellers, which it calls Vendor Central, and Seller Central, for third-party sellers” - into a single platform, called One Vendor.

This move, the story says, “could be another way the company continues to assert dominance over the brands that sell on its platform.”

Some context:

“Specifics on exactly how One Vendor will operate are scarce. Amazon said that it doesn’t have a One Vendor program. But according to former Amazon employees that now operate agencies assisting brand clients in selling on Amazon, it’s coming, and a consolidated marketplace would be both an efficiency play (one marketplace is easier to operate than two) and a way to exercise control over how brands appear on Amazon. There’s also the media play, as this could be a way to muscle brands into spending more on Amazon’s ad products.”

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From Webstop...

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From ReposiTrak...

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• In Oregon, the Portland City Council has passed an ordinance “that will drastically reduce single-use plastics across the city,” voting unanimously “to restrict plastic serviceware like straws, stirrers, utensils, and condiment packaging.

“Under the new ordinance, customers only get plastic straws if they specifically ask for them.”

The story notes that “plastic straws account for roughly one-sixth of all litter in the United States.”

Bloomberg reports that lab-grown meat producers, having turned to traditional meat companies for funding, now are hoping they can use the legacy companies for distribution - even though, on the surface, it would appear that they are trying to usurp the dietary role of traditional meat products.

“A partnership between traditional meat companies and their would-be cell-based competitors would make sense,” the story says. “Consumers are buying increasingly larger quantities of products that are seen as more humane and environmentally friendly. Traditional meat producers could use a foothold in this fast-growing niche, while cell-based meat startups could use some assistance in ramping up operations.”

Online This Afternoon: A Special Panel About Supply Chain Innovation

This afternoon I’ll be moderating a panel discussion in Cambridge, Massachusetts, at the Venture Cafe Kendall … the subject is Supply Chain, and “Innovating From Raw Materials to Store Shelves.”

Here’s a link to event information … and if you’re in the area, I hope you’ll stop by.

The event also will be streamed live, which you can see here.

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Industry Drumbeat

“RETAIL 2020: What’s The Future (WTF)?” - A New Presentation by Kevin Coupe

In this fast-paced, interactive and provocative presentation, MNB's Kevin Coupe challenges audiences to see the fast-evolving retail world through a radical new 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 pave the 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.

Constantly updated to reflect the hand crafted news stories covered and commented upon daily by MorningNewsBeat, and seasoned with an irreverent sense of humor and disdain for sacred cows honed over 30 years of writing and reporting about the best retailers and retail strategies, “RETAIL 2020/WTF” will get your meeting attendees not just thinking, but asking the serious questions about business and consumers that serious times demand. See a sample at left…

Here’s what Lori Stillman, Executive Vice President - Analytics, Insights and Intelligence, Advantage Solutions, has to say about a recent appearance:

"Kevin joined us as a moderator and facilitator for a two-day client executive event we hosted. His role in the success of the event went far beyond his time presenting and sharing his great wisdom and content. From the moment our planning process began and we selected Kevin as a key part of our program, he dove in and worked with our team to review session topics, ideate on programming and help ensure our overall event delivered on the goals we had established. His quick wit, deep industry knowledge and ability to synthesize conversations into key take-aways enabled us to hit a home run!”

And, from Joe Jurich, CTO of DUMAC Business Systems:

”Kevin recently participated in and spoke at our Annual User Conference.  Our group consisted of independent retailers, wholesalers, and software vendors – a pretty broad group to challenge in a single talk.  While his energy, humor, and movie analogies kept the audience engaged, his ability to challenge them to think differently about how they go to market is what really captured them!  Based on dinner conversations afterward, he appeared to have left everyone thinking of at least one new approach to their strategy!”

Want to make your next event unique, engaging and entertaining? Contact Kevin at , or call him now at 203-253-0291.

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Your Views

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PWS 51