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Monday, May 13, 2019

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Monday Eye-Opener: Rear Guard Action

by Kevin Coupe

You’d think if there were one product category that would be safe from disruption, it would toilet paper. It has a specific and inevitable use, almost everybody in the developed world uses it (though the toilet paper industry points out that “70% - 75 % of the world’s population does not use toilet paper”), and most of the innovation has to do with how thick it is.

But the Washington Post reported over the weekend about a movement to eliminate the need for toilet paper, which would have economic advantages for people who cannot afford it as well as positive environmental implications.

The movement, the Post writes, is being powered by “bidet evangelists,” who “want to change the way Americans do their business, one bathroom at a time.”

Here’s how the Post frames the story:

“‘We have customers that tell us there was life before bidets and life after,’ says Jason Ojalvo, chief executive of Tushy, which sells bidet attachments online. ‘We think that there is no reason that bidets should not be mainstream in America. It’s ridiculous; they are everywhere but here.’

“Tushy’s target consumers, eco-conscious millennials, probably aren’t rushing out to install pricey plumbing fixtures in their apartments. The company’s bidet attachments are meant to appeal to renters and the cost-conscious. And its colorful, irreverent ads show a product that’s a far cry from the porcelain fixtures you’ll find in Europe and Asia. It’s a small, plastic box that connects to your toilet seat.

“Tushy isn’t the only company on the bidet attachment bandwagon. Online retailers, such as Brondell and BidetKing, have seen 15 to 20 percent growth in sales over the past two years. Daniel Lalley, a spokesman for Brondell, says there was a mystique behind bidets for so long that he hopes this uptick in sales means the taboo has been broken for good.”

The story goes on:

“Stand-alone bidets in Europe can cost hundreds or thousands. Installation can be expensive, too; it needs to be done by a plumber. Bidet attachments can cost as little as $30 (or as much as $400) and require little time or skill to install. Simple non-electric attachments from Amazon can range between $25 and $45. Brondell sells various styles of bidets, such as a slim-style attachment for $39.95. (The company also caters to left-handed people with attachments between $49 to $69.)

“Assuming a high usage of 20 minutes of washing per day, you can expect to see an extra addition of less than $2 in your water bill, Baeza says. A standard electric attachment from BidetKing will add an average of $45 to your electric bill annually … The real cost savings, fans say, come one toilet paper roll at a time, as users limit or even stop their usage.”

And that could be an Eye-Opener.

To Infinity & Beyond: Amazon’s Ambitions & Controversies

Three interesting stories from the weekend about Amazon and the growing blowback that seems to be accompanying its growing ambitions and achievements.

First, from the Wall Street Journal, which reports that Amazon has Facebook-type problems: “It’s become such a gigantic, sprawling, powerful business that its inevitable missteps are beginning to erode trust in its products and services, good will in Washington, and its ability to achieve globe-spanning dominance.

“Let’s pause to reflect that the company that has made one-day shipping of tens of millions of items the industry standard is also the global leader in cloud computing services, owns the Whole Foods grocery stores (and is building a second chain), helps police departments identify criminals, is building its own air cargo fleet, has an $11 billion-a-year advertising business, is working on a plan to give everyone on Earth internet from space, has put always-on microphones in at least 1 in 10 U.S. homes, built an Oscar-winning film and TV studio from scratch, and is competing directly with UPS, FedEx, Google, Facebook, Apple, Microsoft, IBM, the entire book-publishing industry, Netflix, HBO, Disney, Walmart, Target, Costco, Kroger, CVS, Walgreens and countless startups.”

The problem is that it has almost as long a list of issues with which to deal: “Amazon is embroiled in controversies over the use of its facial-recognition software, the treatment of both its warehouse workers and its delivery drivers, whether its talking speakers violate child-protection rules, how much it is really lowering prices at Whole Foods, and whether or not its Ring doorbell-camera subsidiary is protecting users’ privacy. In the past month, the company got into a very public Twitter spat with Democratic presidential candidate Elizabeth Warren, who has proposed breaking up Amazon, rebutted reports that it fires warehouse employees through an app, and denied that it dismissed seven workers on account of their pregnancies. Before that, the company had to start accepting cash at its cashless stores in order to avoid discrimination, and address allegations its employees listen to recordings from Echo devices. And then of course there was the time Amazon decided not to locate their HQ2 in New York City, after local and state politicians called the company so toxic they’d rather not host a massive economic stimulus.”

Amazon’s response to concerns that it is getting too big and powerful is that “Amazon is less than 1% of global retail, or less than 4% of U.S. retail. That’s a smaller share than Walmart.”

Meanwhile, the Washington Post (which, it should be noted, is owned by Amazon founder-CEO Jeff Bezos in a private investment), has a story about problems that Amazon is encountering outside the US.

In India, for example, “the country’s policymakers recently raised alarm bells about what they describe as a ‘handful of companies’ that ‘dominate the digital economy’ and earlier this year instituted a rule change that forced Amazon to scale back aspects of its business in India.”

The story goes on to point out that “three sets of regulators in Europe over the past year have opened investigations into whether Amazon is a threat to open competition … If policymakers in these countries end up moving to limit Amazon — in effect protecting homegrown businesses — that would present a barrier to continuing the company’s record of unbridled growth. Amazon has rapidly grown its sales over the past two decades, but some analysts are now questioning whether the U.S. market is becoming saturated, putting an increased burden on foreign sales.”

The Post writes that “Amazon’s international business is important to its overall model, accounting for 28 percent of its revenue in 2018 — although it has long been a money-losing unit. Adding to the importance of succeeding in India and Europe, the top market for many American companies, China, has long been difficult for Amazon.”

Jeff Bezos’ ambitions, of course, aren’t just terrestrial.

The Seattle Times reports on how, last week, Bezos took to a Washington, DC, ballroom to describe “his dreamy vision of the future: not just millions of people in space but eventually 1 trillion, living not on moons or planets, but space colonies … The space colonies would be decades away, to be built by future generations. Bezos said what he and others today can do is start building the infrastructure. In the short term, that includes a lunar lander, Blue Moon, a sleek vehicle that became visible as a curtain in front was pulled away.”

The Times points out that this was really the first time that Bezos has been so public about the plans and ambitions he has for his space company, Blue Origin, which he hopes will be part of any revived US space program.

“Blue Origin now regularly conducts test flights of its suborbital New Shepard rocket,” the Times writes. “That spacecraft is designed to take space tourists on short hops into space, where passengers will experience just a few minutes of weightlessness before New Shepard’s passenger capsule returns to Earth’s surface. The company said during its latest test — the 11th — that the first flights carrying people will occur later this year.”

“We are going to build a road to space,” Bezos says. “And then amazing things will happen.”

KC's View: Tom Furphy often has made this point here on MNB - the bigger it gets, the more public its ambitions and achievements and yes, even its mistakes will become. (And while we’ve spent precious little time discussing here here, so will the personal life of its founder.)

I do think that Amazon is going to have to spend more energy than it probably would like focusing on perceptions. Like it or not, perception matters, because public opinion drives public policy, which can have an impact on Amazon’s (and any company’s) ability to grow.

I’ve often suggested that Amazon can be seen either as the evil Empire or the Rebel Alliance … it all depends on your point of view. Amazon’s point of view is best communicated as it tells its story, over and over and over.

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From United Fresh...

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How Digital Loyalty Programs Put Customers At Risk

The New York Times over the weekend had a story about how “ loyalty programs, as they shift from paper and plastic to apps and websites, are increasingly tracking a currency that can be more valuable than how much you spend: personal data. As a result, the programs know things about you that some of your friends may not, like your favorite flavor (mango), when your cravings strike (early afternoon) and how you pay (with your Visa), in addition to billing details and contact information.”

As this shift takes place, the story points out, “hackers are in close pursuit.” The story notes that conservative estimates are that “$1 billion a year is lost to crime related to the programs,” and that fraud related to digital loyalty programs more than doubled between 2017 and 2018.

The Times points out that “loyalty programs are ‘almost a honey pot for hackers,’ said Kevin Lee, a risk expert for the digital security firm Sift. They tend to be, he said, ‘the path of least resistance’: easy to sign up for, shielded by flimsy passwords and often neglected by users. The programs, and their appetite for data, have grown, but security has not kept pace.”

KC's View: Two things here.

One, retailers have to remember that if things go south in their loyalty programs because of hackers, they are going to have to take responsibility, because consumers are going to assign the blame to them. Just deal with it, and don’t try to pass the buck.

Second, there was an interesting line in the story: “There are at least 3.8 billion rewards memberships in the United States, more than 10 per consumer, according to research from LoyaltyOne, a loyalty advisory company.”

This makes me wonder how many of those loyalty memberships are with competing companies … how many people belong to three or four supermarket programs, two or three drug store programs, etc… And if they indeed to multiple programs in single retail segments, how loyal are they really?

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From The Organic Produce Summit...

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Finding Entrepreneurial Opportunities In The Blue Ocean

Bernhard Schroeder, director of the Lavin Entrepreneurship Center at San Diego State University, has a column in Forbes about how entrepreneurship these days isn’t about having the best ideas, but rather about identifying the best opportunities.

“If you want to become an entrepreneur,” he writes, “but don’t know where to start, relax. It’s not about ideas, it’s about understanding and researching current industries that have not innovated their products or services and have a large customer market. If you think about what Netflix, Amazon, Uber and AirBnb did, you can clearly see, they created nothing new in terms of products. So, what did they do? They changed the ‘game’ in an industry that was not being innovative and was ripe for disruption.”

The term for this approach, Schroeder writes, is Blue Ocean Strategy, which “challenges everything that you thought you knew about the requirements for entrepreneurial success. Blue Ocean Strategy can be summarized in a nutshell: the best way to beat the competition is to make the competition irrelevant.”

Examples from his column: “Amazon did not build bookstores but built an enterprise infrastructure to have access to one million book titles and competed well with Borders and Barnes & Noble. Netflix did not use stores in their business model to compete with Blockbuster; instead they focused on customer service. Uber did not even try to buy cars and compete with the independent taxi companies, they created a mobile app. AirBnb does not own homes or hotels, instead they redefined the travel experience by uniting existing property owners onto a common easy-to-use platform.”

KC's View: I think it probably is important not to dismiss the value of a good, original idea … though I agree that identifying ripe-for-disruption opportunities also is a good way to go.

Axios had a story the other day about the inevitable result of Blue Ocean strategies - which is that the folks with the biggest boats start acquiring the smaller, more nimble boats. Harry’s gets bought by Schick. Dollar Shave Club gets bought by Unilever. And so on, as “giants like Amazon, Unilever and Walmart are swiftly buying out plucky companies that start to threaten them.

“In a single transaction, these deals transform upstarts from worthy competitors to weapons in the giants' battle with other giants.”

Why A Chicago Independent Grows Despite Daunting Competition

Good piece in the Chicago Tribune about Pete’s Fresh Market there, which “recently opened its 14th store, in a former Whole Foods Market in Wheaton, and has new stores coming to Glen Ellyn and Lemont this fall. Four additional stores — in Matteson, New Lenox, Oak Park and Oak Lawn — are slated to open over the next two to three years.”

This expansion, the story suggests, “is aggressive for an independent grocer competing with deep-pocketed chains like Albertsons-owned Jewel-Osco, Kroger-owned Mariano's, Amazon-owned Whole Foods Market and fast-growing discounter Aldi.”

What’s working for Pete’s?

According to the Tribune, “Pete’s, which focuses on produce and other fresh food but still offers a full lineup of groceries, has the wind at its back in part because consumer tastes are favoring fresh fare. That also makes it less vulnerable as grocery delivery becomes increasingly popular, though Pete’s also offers delivery … Pete’s also is proving to be among the best in the business, industry watchers say, standing apart from its rivals with a lively assortment, attractive stores, good value and keen focus on what its customers want … Its employees are friendly, its products are interesting and the experience makes grocery shopping not feel like a chore.”

In addition, “Pete’s is meticulous about specifying its product selection for the neighborhood it is in and listening to its customers,” the Tribune writes. “In Oak Park, where it already has one store, it has a customer service concierge, a position it created for a chatty and helpful stocker, because the shoppers there like that kind of thing. In Pilsen, which used to have a Hispanic focus, it has introduced a greater variety of unusual fruits and vegetables because the hipsters moving into the neighborhood like to try adventurous meals.”

Stephanie Dremonas, who with her sister Vanessa Dremonas is running the business founded by their father, James “Jimmy” Dremonas, explains their success this way: “It’s a classic business model: Sell good stuff at a good price and make the environment nice to shop in. There’s no secret to it … The execution is where the secret is.”

KC's View: It is enormously satisfying to me as an interested observer to see independent retailers that manage to be competitive and growth-oriented even in times like these … and they do it by focusing on the stuff that makes them different, not the stuff that makes them the same.

Sobeys To Launch New E-commerce Service Next Year

Empire Company, parent to Sobeys and IGA in Canada, announced that Voilà, a new e-commerce business that will launch next year. Voilà by Sobeys and Voilà par IGA, the company said, promise “to help Canadians stay one step ahead of their busy lives, underscored by a new tag line ‘Your groceries delivered. Just like that’.”

The services will be powered by robotic warehouses developed by Ocado, which has similar deals with Kroger in the US, Morrisons in Britain, Casino in France, Sobeys in Canada and ICA Group in Sweden. They will launch in the Toronto market in 2020, and then will expand to Ottawa and major cities in the Province of Quebec in 2021.

The announcement quotes Sarah Joyce, SVP, E-commerce for Empire, as saying, "We are building the most advanced e-commerce infrastructure in Canada. An online grocery home delivery experience like Voilà by Sobeys does not yet exist in Canada. While most players in the industry are focused on store pick models to fulfill their online orders, we are building automated warehouses specifically designed for best-in-class home delivery based on a highly successful model from the U.K. Voilà by Sobeys will deliver Canadians exactly what they want, when they want it, every time.”

Empire said that Voilà “will offer an expansive product selection of up to 39,000 products, including high quality fresh produce, at prices comparable to Sobeys and IGA.”

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From Cornell University...


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Coffee Maker Sues Starbucks For Disparaging Its Brand

Reuters reports that Bodum Holding AG, maker of a well-known brand of French press coffee makers, is suing Starbucks, accusing it of disparaging one of its products.

The story points out that Starbucks recently recalled “263,200 co-branded French presses made from recycled materials,” saying that they were defective; Starbucks says that “it recalled presses sold from November 2016 to January 2019 for about $20 each after receiving nine reports of broken plunger knobs, resulting in lacerations or punctures.”

Bodum says that tests did not prove any specific defect, but that Starbucks was being over-sensitive. The recall, it says, created the impression that all Bodum French presses were defective, and caused it “significant brand damage.”

KC's View: Two things here.

First, nine problems apparently related to product quality strikes me as being more than a coincidence. This doesn’t strike me as over-sensitivity. In fact, it strikes me as being entirely appropriate … and Starbucks did the right thing.

Second, I would challenge Bodum’s assertion that it affected all of its French presses. In fact, I bought one over the weekend at Crate & Barrel, and it never occurred to me that it would share the problem with the version sold at Starbucks. However, if for some reason I have a problem, I expect Crate & Barrel to take it back, and if there are multiple problems reported by a number of consumers, I expect Crate & Barrel to take broader actions.

Good retailers are agents for their consumers. They ought not be sued for fulfilling this mandate.

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Corporate Drumbeat

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:

Bull.

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.

Now back to regularly scheduled editorial...

Worth Reading: Feeding Responsibilities

Good column in the Wall Street Journal by author Bee Wilson that makes a couple of important points about the responsibility we all have for feeding our children. It suggests that a) kids’ diets are deteriorating on a global basis, and b) we can’t just assume that moms will get it done all by themselves.

Regarding the first point:

“Where children around the world used to eat varied diets based on their own local cuisine—from bean stews in Brazil to the potage bonne femme of France—now their diets are converging on a single palate of sweet-salty-fatty packaged foods. You wouldn’t expect a child in Portugal and a child in China to consume the same after-school snack. But a study conducted from 2011 to 2013, based on interviews with more than 7,000 9- to 11-year-olds in 12 countries, found that similar patterns of eating are emerging across the world. Children now tend to consume near-identical packaged cookies and cereal bars, branded snacks, candies and crackers. The worst of it is that many of these unwholesome and sugary packaged goods are cynically marketed as ‘healthy,’ kid-friendly or pediatrician-approved.”

And the second:

“A mother’s cooking is a wonderful and powerful thing, but it doesn’t have to be done by mothers alone. In most societies, whether human or animal, the act of feeding has been something collective and collaborative rather than individual. You know that mother bird ferrying nutritious worms to the nest? She has back-up. I discovered recently that when a nest of robin eggs hatches, the father robin as well as the mother takes on the job of feeding. Like her, he flies off to fetch worms, dropping them tenderly into the open beaks. The father and mother bird work together to guard the nest as their vulnerable offspring eat.

“We often assume that the act of feeding a child comes naturally to a mother, thanks to some kind of innate feminine talent, but this isn’t so. Among primates such as monkeys, infants are often fed and groomed by females who are not their mothers, in order to teach mothers how to do a better job. Feeding, as much as eating, is a skill, with which most of us could use a little help.”

You can read the entire story here.

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From Webstop...

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FastNewsBeat

• The Times of London reports that Tesco, continuing to seek ways to effectively compete with surging discounters Aldi and Lidl in its home market, plans to edit 20 percent of the SKUs from its product mix, this after already cutting its selection from 90,000 items in 2014 to 40,000 currently.

Tesco’s strategy has taken several forms. In addition to editing its SKU count, it also has been adding a new discount private label brand - Jack’s - to its shelves, brought over from the Jack’s discount stores that it has been opening. And, its CEO, Dave Lewis, has been pushing for a two percent tax on all online purchases, which would be used to support bricks-and-mortar retailers.

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From IDDBA...

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RIP

Doris Day, a big band singer who became one of the biggest movie stars of the 1950s and 1960s, has passed away at age 97.

Day started out doing musicals, then transitioned to romantic comedies (doing a series of “bedroom farces” with Rock Hudson), and even starred with James Stewart in Alfred Hitchcock’s much-respected second version of “The Man Who Knew Too Much.” Her most famous song: “Que Sera, Sera” (which was sung originally in the Hitchcock movie). Among her other co-stars: Cary Grant, James Cagney, Clark Gable, Frank Sinatra, Kirk Douglas, Lauren Bacall, James Garner, Rod Taylor, David Niven, Jack Lemmon, and Ronald Reagan.

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“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 kc@morningnewsbeat.com , or call him now at 203-253-0291.

Now back to regularly scheduled editorial...

Your Views

…will return.

A Retail Tomorrow Podcast: Inside The Kroger-Microsoft Alliance

In this new edition of the Retail Tomorrow Podcast, we discuss the unique partnership between Kroger and Microsoft, developing cutting edge innovations that will take each of them to the next level when it comes to things like digital shelving, video analytics, sensor networks, temperature tags … and beyond. And here’s the thing - the innovations that emerge are not proprietary, but will be available to any retailer looking to leap into the future.

This podcast was recorded at GMDC’s recent Retail Tomorrow Immersion conference in Los Angeles.

Our guests:

• Kevin Fessenden, Senior Product Manager at Sunrise Technology, which is a Kroger company.

• Chris Dieringer, Senior Director of Industry Solutions for the Retail and CPG Industry at Microsoft.

The host: Kevin Coupe, MorningNewsBeat’s “Content Guy.”

You can listen to the podcast here, or on iTunes and Google Play.

Pictured, from left to right:

Kevin Coupe, Chris Dieringer, Kevin Fessenden.





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