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Thursday, October 17, 2019

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FaceTime with the Content Guy: The Bricks And Mortar Solution


This week, MNB "Content Guy" Kevin Coupe reports on the opening of a new Nordstrom department store in Norwalk, Connecticut … asks questions about the future of this particular form of retailing … but suggests that he's had an epiphany about how bricks-and-mortar stores can lure people through their doors.

As always, this and past FaceTime commentaries can be found on the MNB Channel on YouTube.

Thursday Eye-Opener: Ebb and Flow Charts


by Michael Sansolo

Spoiler alert: the world is changing. It isn't your imagination. And as the world changes, so do the companies that dominate the business landscape.

The video at left was sent to me by a longtime friend and industry legend, Larry Cooper, and it is the very definition of an Eye-Opener - an animated and dynamic representation of the top companies in the US between 1954 and today. The past 65 years have been remarkable, to say the least.

Pay attention not just to the companies that have ascended on the list, but the companies that not only have fallen of it, but that no longer exist. (Anyone heard from ITT lately?)

Also, notice the shifting patterns in various industries as the list moves through the domination of automobile manufacturers to oil companies then financial firms and lastly technology companies. The list will also remind us all that once Walmart, Apple and Amazon were small companies and its incredible to watch each of them climb the list.

Finally, as you watch the ebbs and flows of the list, ask yourself what it will look like in five years … in 10 years … or even 65 years from now.


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From GMDC's Retail Tomorrow...

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Aldi, Lidl Disrupt Traditional US Food Retail

The Wall Street Journal reports that german discounters Aldi and Lidl, having done a good job of having disrupted the UK supermarket business and nibbling away at market shares there, now seems to be doing the same thing in some US markets.

According to the story, "The privately owned foreign companies have increased sales with their simpler stores that offer fewer products at lower prices. In response, U.S. grocers are lowering prices on staples such as milk and eggs and adding more products the discounters aren’t known for, such as fresh foods. The battle comes as supermarkets already are fighting to keep customers from shopping more online."

John Ross, president and chief executive of IGA Inc., tells the Journal, “Our country has been invaded by the German retailers, and they have disrupted the ecosystem quite severely." He called it "the biggest shift for U.S. grocers since Walmart Inc. entered the food business in 1988. Today Walmart is the biggest U.S. food seller."

In addition, "Walmart executive Steve Bratspies said at a recent conference that the giant retailer is counting on its wider range of products and equally low prices to keep customers loyal." The responses by competition have "pressured Aldi and Lidl to move beyond their no-frills model to attract U.S. shoppers. They are adding more produce and baked goods and renovating store interiors with brighter lighting and new layouts. Aldi said remodeled stores offer 20% more retail space."

The story goes on: "Sales at 'limited assortment' stores, a category that includes Trader Joe’s in addition to Aldi and Lidl, are projected to grow 5.6% annually through 2023, according to Inmar Analytics Inc., while sales at traditional supermarkets are projected to increase 0.5% annually … Aldi, which opened its first U.S. store in Iowa in 1976, has doubled its store count over the past decade to about 1,900 across 36 states. Lidl, which entered the U.S. two years ago, aims to have more than 100 U.S. stores open by the end of next year."

KC's View: In some ways, this was entirely predictable, since roiling markets is exactly what Aldi and Lidl do.

Because of the size of the US market, they can't have the kind of sweeping border-to-border impact here that they've had in the UK. But on a selective basis, in the markets they do serve, they can have a devastating impact … and it is likely to be become a bigger problem for so-called traditional retailers when a recession comes.

I would suggest that IGA's problem isn't that there has been an "invasion of German retailers." Its real problem may be that IGA stores not only don't play very good defense, but also aren't very good at offense. "Hometown Proud" may only get you so far in this marketplace.

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From Mercatus...

ARTICLE TEXT



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Bidding War Reflects Differing Opinions About The Future of Retail

The New York Times reports that a bidding war for bankrupt Barneys New York isn't just about money - it actually reflects divergent perspectives on what the future of retail will look like.

One of the bidders is Authentic Brands Group, which owns more than 50 brands including Nine West, Nautica and Hickey Freeman, which "made a formal $264 million offer for Barneys that was accepted by the store’s lenders." According to the story, "A.B.G. has said it would try to keep Barneys stores open, especially the Madison Avenue flagship, it is prepared to close all seven of them if better rental agreements cannot be reached. It has already lined up the Great American Group to run liquidation sales. No mention was made in its offer of what would happen to current employees." Digital also is said to be at the core of this group's approach.

(Note: There were reports this morning that A.B.G.'s "stalking horse bid," which sets the terms for competitive bids, actually will result in all of Barney's stores being shuttered.)

The A.B.G. bid prompted another group, described as "a consortium of New York investors led by Sam Ben-Avraham, the co-founder of the streetwear brand Kith and owner of a group of trade shows," to prepare a competitive bid; its plans, according to the Times are to "keep at least two of the remaining seven Barneys stores open, including the Madison Avenue flagship with its nine-floor footprint. It would retain at least some of the current management."

The Times story suggests that these two groups seem to have fundamentally different views of what retailing is going to look like in the future. One believes in "the abstract values of brand names rather than in-person shopping experiences," while the other seems more focused on a more traditional approach to retailing.

KC's View: The A.B.G. deconstructionist approach isn't limited to retail. The Times points out that it recently bought the intellectual property associated with Sports Illustrated for $110 million and plans to use these assets for marketing purposes; it sold the magazine to a digital company, which then imposed massive layoffs on the once-distinguished media property.

I'm honestly less interested in the bidding process - there almost certainly will be others getting involved - than I am in the divergence of perspectives. While I'd like to think that the consortium, which has a greater focus on the legacy stores, has a shot, I tend to think that the A.B.G. approach probably is more workable and maybe even inevitable.

Everything else, in this sector at least, may just be a way station on the way to deconstructed retail … in the same way that, much as it pains me to say so, the traditional Sports Illustrated model probably was doomed to being dismantled.

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Worth Reading: Inside The Consumer-Driven Supply Chain

Supply Chain Dive has an excellent piece about how retailers are dealing with consumers' desire for more products, more products, and even more products in stores…

An excerpt:

"Shoppers are demanding retailers make more products available, more quickly, and through various points of sale. The consumer-driven supply chain is here, and as a result, retailers are in a sort of arms race, seeking out the best tools to satisfy consumer needs." But, the article argues, "If retailers want to unlock greater sales, they must first look to make their supply chains more efficient."

The problem, though, is that increased demand puts greater pressure on supply chains, and the way things are, creates more out-of-stocks because current supply chain structures simply cannot keep up. And, the story says, "low availability may translate to lost sales or even lost business for retailers."

For more about how to transform supply chains - as exemplified by Walmart's latest "on-time, in-full supplier policy" - read the entire story here.

KC's View: Underline this not surprising - and yet under-appreciated - conclusion … that too many retailers are suffering from too many out-of-stocks that are sending consumers into the arms of competitors such as Amazon. If stores don't have the items that people want, then why should people go to stores?

Kroger Moves To Standardize Private Label Date Labels

Kroger yesterday announced that it plans to "standardize date labels for Our Brands food products, providing simpler, easier-to-understand product quality and safety information as part of its Zero Hunger | Zero Waste social impact commitment."

Howard Popoola, Kroger's vice president of corporate food technology and regulatory compliance, explains: "Kroger recognizes food waste often takes place in our customers' kitchens simply because product date labels can be confusing, resulting in safe-to-eat food regularly being tossed out. As Kroger works to reduce food waste throughout our business and our communities, we are standardizing and simplifying Our Brands products' date labels, providing clearer guidance to our customers."

Kroger is transitioning its Our Brands food products to feature one of the following date labels:

• "Use By" is used to represent food safety. If a customer reads "use by" followed by a date, it indicates the deadline for when it is no longer safe to eat.

• "Best if Used By" is used to represent food quality. If a customer reads "best if used by" followed by a date, it indicates the deadline for guaranteed freshness but does not affect the product's safety.

The simplified labels will apply to multiple product categories, including dairy, deli, bakery, and fresh and frozen grocery.

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From Ideoclick...

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DNA Testing Company Ventures Into Genetic Screening

Wired reports that DNA testing company Ancestry, which to this point has focused on helping people learn about their roots, has "unveiled its long-awaited plans to expand beyond family-tree-building and into genetic screening for potential health problems."

The new division, called Ancestry Health, will offer "a one-time test for nine hereditary conditions, including breast and colon cancer, heart disease, and blood disorders. It’s based on the same DNA chip the company uses to estimate where in the world your ancestors lived, and it will be immediately available to anyone for $149 ($49 for existing AncestryDNA customers)."

In addition, "a subscription service based on more advanced sequencing technology, which provides quarterly updates on a wider set of health concerns, will roll out next year at a cost of $199 plus $49 for every six months of updates. As a nod to the company’s namesake, both services will also include a tool for tracking family health history to make it easier to share with physicians."

KC's View: The more information that people have about their health and hereditary conditions, the more intelligently they will be able to shop for food … because we all know that there is a direct link. Retailers would be wise to find ways to be part of this ecosystem.

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From Webstop...

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The MNB Walmart Watch

• The Wall Street Journal reports that Walmart is "trying out interactive video to market and sell toys. Walmart - as well as companies like Mattel - are “leasing floors” in a "new virtual store called KidHQ, which lets users browse toys and merchandise in videos with various choose-your-own-adventure formats.

"In Walmart’s Toy Lab, for example, users can examine, test and watch children (played by actors) play with 40 different toys including a transforming Batmobile and a Star Wars lightsaber."

The story notes that "KidHQ was built by Eko, a startup that received $250 million in funding from Walmart last October to create a joint venture for interactive programming. Walmart and Eko experimented with an initial version of a Toy Lab that generated 8 million interactions, Eko said. Visitors spent an average of 13 minutes and had 13 interactions per visit, the company said. Twelve percent of users also added a toy to their wish lists, the company said.

This is Walmart's second go-round with the concept. MNB's Kate McMahon evaluated last year's efforts here.


Reuters reports that Walmart "has agreed to pay $14 million to settle a potential nationwide class action alleging that it discriminated against pregnant women by refusing to offer “light duty” assignments for their medical conditions under a national policy the retailer changed in March 2014.

"Named plaintiffs Talisa Borders of Illinois, Otisha Woolbright of Florida and Stacey Lewis of Virginia filed the unopposed motion for preliminary approval of the class settlement in federal court in East St. Louis, Illinois on Tuesday. If U.S. District Judge Staci Yandle grants preliminary approval, potential class members will be notified and have an opportunity to object."

FastNewsBeat

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

• Interbrand is out with its annual list of the the world's most valuable brands, concluding that Apple, Google and Amazon are the top three, in order.

Rounding out the top 10 are Microsoft, Coca-Cola, Samsung, Toyota, Mercedes Benz, McDonald's and Disney.

Ranked 11-20 are BMW, IBM, Intel, Facebook, Cisco, Nike, Louis Vuitton, Oracle, GE and SAP.

In a prepared statement, Charles Trevail, Global CEO of Interbrand, said, “A decade after the global financial crisis, the brands that are growing fastest are those that intuitively understand their customers and make brave iconic moves that delight and deliver in new ways."

I know this is just a quirk in the way the rankings are compiled, because Interbrand says they are based on a synthesis of "financial performance of branded products or services, the role that brands play in purchasing decisions and brands’ ability to create loyalty." But how does Walmart not make the list?


• The Wall Street Journal reports that Netflix announced third quarter subscriber growth in what will be the last filing period before it faces off against new streaming competition from the likes of Disney and Apple that is priced lower than its plans.

The growth, while less than the company had been hoping for, apparently reassured a restive investor class that was concerned that the company might have a repeat of its second quarter subscriber loss.

The story says that Netflix "added 517,000 domestic subscribers in the third quarter compared with the second quarter—short of the 800,000 increase it had expected. Globally, Netflix added 6.8 million subscribers in the quarter, slightly fewer than the 7 million it had forecast.

"Netflix said subscriber retention continues to suffer from its decision earlier this year to raise prices, a move that led to slower-than-expected subscriber growth. The higher subscription fees did boost average revenue per subscriber by 16%, which will allow it to invest more to 'strengthen its value proposition,' the company said in its letter to shareholders."

Q3 revenue was up 31 percent to $5.25 billion, with profit for the period of $665 million, up from $403 million during the same period a year ago.


• The Washington Post this morning reports that "U.S. consumers unexpectedly pulled back on retail spending for the first time in seven months, reviving fears that a weakening economy could finally be taking its toll on American shoppers just before the pivotal holiday season.

"Retail sales slipped 0.3 percent in September from the month before, the U.S. Commerce Department said Wednesday, as shoppers spent less on automobiles, building materials and sporting goods. Sales at department stores fell 1.4 percent from the month before, while online shopping slipped by 0.3 percent."


USA Today reports that Hamilton Beach Brands Holding Company has announced that "it would close all of its 160 Kitchen Collection stores by the end of 2019.

"Ten months into 2019, there have already been 47% more store closings announced than in all of 2018, according to a new report from global marketing research firm Coresight Research."

Executive Suite

• US Foods announced that Tim Connolly, who joined the company just a few months ago as Executive Vice President and Chief Supply Chain Officer, has resigned, effective immediately. No reason has been given for his sudden departure.

A search has begun for his successor.

Your Views

…will return.

From The MNB Sports Desk

The fourth game of the American League Championship Series between the Houston Astros and the New York Yankees was postponed last night because of severe rain in the New York metropolitan area. The best of seven series, in which the Astros have a 2-1 game advantage, resumes tonight at 8:08 pm.

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HOW TO BE A RETAIL PIRATE: Authentic, Relevant, Resonant, Rapid, Revolutionary (ARRRR!)

A NEW PRESENTATION BY KEVIN COUPE

Steve Jobs once said, “Better to be a pirate than join the navy.” In today’s cutthroat retail environment, that attitude needs to be at the core of every business’s strategic, tactical and operational approach - challenging the status quo, doing the unexpected, creating customer-centric business initiatives and then disrupting them internally … appealing to people’s hearts and heads and aspirations … acting with piratical verve and always moving forward. In this brand new, lighthearted, illuminating and uniquely pertinent presentation, filled with examples and anecdotes and lessons, MorningNewsBeat’s Kevin Coupe brings a passion for storytelling and a unique perspective on business that will entertain and energize audiences.’’

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!”

To book Kevin for your upcoming event, click here , or call him at 203-253-0291.


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How Retailers Engage With Startups To Drive Innovation: A Retail Tomorrow Podcast

There is a health, beauty and wellness revolution taking place, driven by enlightened consumer thinking about selfcare and startup companies that are innovating in the space. In this new Retail Tomorrow podcast, recorded in front of a live audience at the recent GMDC Selfcare Summit in Indianapolis, two such startup companies - in very different spaces - talk about how their strategies and tactics are helping retailers perform more effectively and efficiently.

One important shift that has to take place: Retailers need to say "help me," rather than "show me." Which is more than a semantic difference.

Our guests:

• Monte Ahlemeyer, chief revenue officer at Accelerate, which is on the front lines of the CBD marketing revolution.

• Dan Bourgault, VP, Sales & Business Development at Replenium, which provides consumer-level replenishment services to retailers.

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

You can listen to the podcast here, as well as on iTunes and GooglePlay.

This edition of the Retail Tomorrow podcast is brought to you by GMDC, the Global Market Development Center.

Pictured, below, from left: Kevin Coupe, Dan Bourgault, Monte Ahlemeyer






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