MNB TV: From Amazon to Zipcar - Innovations from the E-Revolution, Part Six
"The Subscription Model" - Part 6 of a 12-Part Series
This morning, MNB continues a series of videos culled from a presentation that I did at the recent Food Marketing Institute (FMI) 2012 Show in Dallas. The session, entitled "From Amazon to Zipcar: Innovations from the E-Revolution," featured an extended conversation with Tom Furphy, CEO of Consumer Equity Partners and the guy who helped Amazon.com get into the grocery business.
Today: How and why creating a subscription model - akin to the Subscribe & Save offering from Amazon - can change the nature of the retailer-consumer relationship.
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Wednesday Morning Eye-Opener: Take Me Out To The Twitter Feed
Forget bat day and cap day. Major League Baseball has entered the 21st century.
The Associated Press had an interesting story about how a number of major league baseball teams are having promotional events keyed to the use of social media. According to the story, "Social media nights have become a common part of the promotional schedule, and some of the best ticket deals and giveaways can be found on Twitter and Facebook. Savvy franchises are trying to create the right mix online — part content and part business opportunity — keeping their followers engaged while also padding the bottom line."
The story goes on to note that "social media nights vary from ballpark to ballpark, but some aspects are fairly consistent. The Cubs offered specially priced tickets and put together contests for their online fans. They encouraged their Twitter followers to use the hashtag CubsSocial to mark their posts throughout the night."
The goal is to create a relevant conversation between fans and the teams, enabling a dialogue that would not have been possible in previous eras.
But there is a key insight that teams like the Chicago Cubs are being careful to keep in mind.
Kevin Saghy, a public relations and marketing specialist for the Cubs who helps run their Twitter account, tells AP that content is the priority, not sales. “If your focus is revenue and your content reflects that, I don’t believe that’s a wise strategy,” he says. “That’s not why people are there. They’re there to converse. So we’ve taken the other approach where it’s definitely a priority for us, it’s something we track, and I can say from 2010 to last year, as we got more involved and offered better content on our platforms, we quadrupled our revenue. So we’re up about 300 percent.”
“It’s about fan engagement and the ability then to be able to enter into that discussion, and not being too corporate, but helping lead and participate in that conversation,” says Tom Feffer, COO for the Washington Nationals. “Why? Because the social media platform is now an access point — to the club, to the players, to promotions, to ticket sales, to the story that’s being told. And the story really lives now in the social media world. It’s extended into that community more than it ever has before.”
Brick-and-Mortar Stores Look For Greater Relevance
In order to combat the e-commerce threat, Reuters reports, retailers are "trying new ways of making them more inviting by pampering customers."
For example, PetSmart "will offer overnight dog accommodations at more stores. Macy's Inc is offering a 'virtual concierge' kiosk, and handbag maker Coach Inc is opening up dozens more men's sections this year.
"These are just some services retailers are trying to keep stores relevant as they try to compete with mobile devices, the Internet and daily deals."
Some companies, such as the Michaels crafts chain and Family Dollar, believe that they will achieve greater relevance through a more extensive presence, and are planning to open many more stores. However, these stores may feature a changed mix - in Michaels' case, some of the new units will be smaller and urban, and for Family Dollar, the plan is to add hundreds of food items.
The goal is simple - avoid the fate suffered by the likes of Circuit City and Borders.
Sometimes I wonder if we're beating a dead horse on this one, but not usually for too long. The reality is that retailers have to be focused on the things that make them different if they are going to be successful, because more than ever, price is not going to be a differentiator. (Price was always a tenuous hook on which to hang one's hat, since it is always possible for someone to undercut you on price if they are willing to go low enough. The transparency of the internet only makes this more so...)
By the way...a great example of a retailer coming up with something different as way of staying relevant is the new Price Chopper limited small store format that the retailer is testing in Saratoga Springs, New York. This 19,000 square foot unit is lean and long, but enormously appealing in both design and merchandising - it would be my guess that it will be a home run with the apartment dwellers who live nearby. I saw it, and my first reaction was that it has all of the appeal that other retailers such as Fresh & Easy have found hard to achieve in a small store.
The New York Times has a story about a man described as "a Soviet biologist turned oligarch turned government minister turned fish farming entrepreneur" who seems to be the only thing keeping alive the dream of creating a genetically engineered fast-growing salmon that can be eaten by American consumers.
The man, Kakha Bendukidze, is the largest shareholder in a company called AquaBounty Technologies, which actually has engineered the salmon and gotten the US Food and Drug Administration (FDA) to conclude that it "would be safe to eat and for the environment," though the FDA has not yet approved production of the fish. And nobody seems to think that approval will come anytime soon, especially in an election year.
According to the story, it is more than just about salmon: "While opponents would cheer the company’s demise, some scientists and biotechnology executives say that if transgenic animals cannot win approval in the United States, then the nation will lose its lead in animal biotechnology as work moves elsewhere. Scientists in China, in particular, are trying to develop livestock that is resistant to mad cow and foot and mouth diseases, sheep with high yields of wool, and pigs and cows with healthy omega 3 fatty acids in their meat."
I'm so torn on this one. There is a big part of me that worries about eating GM products, and I certainly think they ought to be labeled as such ... but I also don't want to be a Luddite about it. Creating such items may indeed be a way to generate more food and feed more people, which could help eradicate hunger in the US and the rest of the world. I'd hate to lose that opportunity because I'm a little squeamish...
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Now back to regularly scheduled editorial...
The MNB Walmart Watch
• The Los Angeles Times reports that "the California State Teachers' Retirement System will cast its 5.3 million shares of Wal-Mart Stores Inc. against the reelection of the company's board after allegations of bribery in the retailer's Mexican operations," saying that the company has seen "a breakdown of corporate governance and lack of oversight."
According to the story, "CalSTRS is the biggest public pension fund to publicly announce that it would vote against the Wal-Mart board's reelection ahead of the June 1 annual meeting in Fayetteville, Ark. CalSTRS' even larger cousin, the California Public Employees' Retirement System, said it was still deciding which current Wal-Mart directors it would oppose.
"Earlier this month, New York Comptroller John C. Liu said that five city pension funds, which own 5.6 million Wal-Mart shares, would vote against five board members.
"Since then, two proxy advisory firms — Institutional Shareholder Services Inc. and Glass, Lewis & Co. — recommended to their institutional investor clients that they not vote for Chief Executive Mike Duke and former CEO Lee Scott, among other board members."
The story says that since the Walton family owns 48 percent of Walmart's voting stock, it is highly unlikely that any actions taken by shareholders will affect the makeup of the board.
Advertising Age reports that while JC Penney had a tough first quarter, losing $163 million with sales dropping 20 percent and traffic down 10 percent, new CEO Ron Johnson is not backing off his goal of making the retailer less focused on promotions and more focused on fair pricing and lifestyle-driven merchandising.
According to the story, Johnson says that the total "transformation" of the company won;t be complete until 2015, at which point the success of the effort can be judged ... though Ad Age notes that investors may not be so patient.
But Johnson - who helped create The Apple Store - is sticking to his guns...and his metaphors.
"Our first 90 days are a little tougher than we expected," he says. "But the good news is the transformation, from my perspective, is way ahead of schedule. … We're trying to essentially convert the Titanic into 1,100 WaveRunners."
Johnson had to know that this wasn't going to be easy ... but I hope the investors give him time to make the transformation work.
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• The Sacramento Bee reports that Save Mart Supermarkets "has extended its labor contract again, while Raley's is entering a second week of bargaining under the guidance of a federal mediator. The two grocery chains continue to press for a quick resolution to labor negotiations that have dragged on since October.
"A third chain, Safeway, is also in negotiations but has been less aggressive about seeking a swift conclusion."
• In New Jersey,the new $138 million Highlands Bridge will today be dedicated to Joseph Azzolina, the food retailer and former State Senator and Assemblyman who passed away in 2010.
• The Grocery Manufacturers Association (GMA), Cornell University and Shanghai Jiao Tong University (SJTU) of China announced that they have signed a letter of intent to work toward establishment of a joint academic program to address food safety challenges in the Asia-Pacific region. Cornell, SJTU and GMA will work together to explore the feasibility of developing specific curriculum in supply chain food safety that will include academic certification programs and state of the art training.
• The Seattle Times reports that Kroger-owned QFC is "enforcing contracts at some of its locations that prohibit private liquor stores from operating in the same shopping centers ... invoking a right that elbows out some slim small-store competition."
According to the story, "The liquor-privatization law, which (Washington State) voters passed in November ... allows only stores measuring 10,000 square feet or more (about the size of a Trader Joe's) to sell liquor — with the exception of some 300 existing state stores.
"About half of those are owned by entrepreneurs who sold liquor under contract with the state. The state has spent the past few months auctioning off rights to own and operate the others. Those rights came with no leases and no promise of a liquor license. The law also allows anyone who cannot negotiate a lease successfully or otherwise do business at those locations to find another store within one mile."
But where it has the legal right, QFC is blocking these small stores from moving into certain locations.
• In Minnesota, the Pioneer Press reports that "General Mills will lay off 850 workers globally, with roughly half the cuts coming in the Twin Cities, as it faces higher costs for the ingredients it uses in its food products and sluggish consumer demand for brands such as Cheerios, Betty Crocker and Yoplait."
Yesterday, MNB reported that in addition to its publicity problems related to its chief counsel telling what some think was a sexist and inappropriate joke at the company's annual meeting, Safeway also is dealing with another contretemps related to its decision to suspend for one month an employee who hit a customer who was kicking his pregnant girlfriend. The employee - Ryan Young - is described by as some as a hero who stepped into prevent domestic violence, and has been praised by police.
According to the story, "Safeway spokeswoman Teena Massingill said Young was not suspended without pay for coming to the woman's aid, but for other unspecific actions during the confrontation that were caught on a store surveillance video. The company is reviewing the footage as part of an investigation, and the union that represents Safeway workers said it is working to resolve Young's case."
I commented, in part:
I can only wish that if I saw such a thing happening that I would have the courage to step in. That takes guts and character ... Bottom line - any person who commits that kind of domestic violence deserves to have his ass kicked.
Got a lot of email on my language...
One MNB user wrote:
You wrote it so eloquently that I simply had to comment; didn’t know you had it in you, Kevin?! I couldn’t agree with you more that anyone that physically abuses women OR children for that matter, definitely deserves a major ass-kicking with extra pain poured on it. I don’t necessarily condone violence as a first response, but in this instance there’s no doubt it is called for to protect a defenseless person. This is the first I’ve heard of the story; surprised it didn’t make bigger headlines or I’ve been out of touch with the national news lately. In my frank opinion, any person with enough mettle to intervene on behalf of a defenseless woman(or child) is indeed a hero in my book and I think most people wouldn’t have the courage to intervene. This Safeway employee (Ryan Young) should be applauded for his bravery. I also have to wonder how stupid or foolish the offender was to commit assault & battery in public and on surveillance no less. Also makes me wonder what this offender has done to his girlfriend behind closed door and others like him…..?????
Another reader wrote:
Your view couldn't be more clear. And more correct. It seems that there is so much of this, and with such weak-kneed responses by the authorities. As far as I'm concerned, at the point when a man starts beating his significant other or children, he should not only have his ass kicked, he should lose all rights and be put away to think about things for a long, long, time. No probation, No anger management classes. No unenforceable restraining orders. Locked up. Period, End of Story.
MNB user Scott Proch wrote:
I agree with your sentiments completely. I also understand why Safeway is taking the action they are taking completely. Managing to contractual rules with or without unions can cause this type of down side in many cases. No doubt Safeway management wants to commend this type bravery and yet, cannot have it be used against them when a less justifiable violent occurrence happens in the future. The PR hit they’re taking for this suspension just doesn’t measure up to the bigger problem created if they get their hands tied and cannot take action if an employee attacks a customer for the wrong reason later.
Kudos to Mr. Young and I sincerely hope a way to commend him, rather than punish can be figured out.
MNB user Ann Hernandez wrote:
I walked a few blocks to lunch in downtown Seattle about two years ago and was horrified when a woman stopped in front of me on the sidewalk, pulled down her pants and urinated on the sidewalk. I immediately got out of the way of the stream and returned to the office.
When I returned to the office, I told my boss about this incident and he said “how many people told her that was inappropriate? Did you tell her that it was inappropriate to pee on the sidewalk?”. No, I did not say a word. And neither did the 75 or so other people that witnessed it. Next, my boss at the time, Tracy Henderson, said something that was very enlightening. “Do you think that she would continue to do this if every person on that sidewalk told her that it was not ok to do so?”
Point taken. I decided from that day forward that I would grow some balls and call people out who are doing things that are just not ok. I commend Ryan Young for doing exactly the right thing. If more people hit abusers back, do you think that they would continue to do it at such a rate?
Remember the line from Edmund Burke...
"All that is required for evil to prevail is for good men to do nothing."
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