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Wednesday, July 30, 2014

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FreshTalk/Video: Green Acres

by Kevin Coupe

"Fresh Talk" is sponsored by Invatron: Proven Technology.  Innovative Thinking.  Intelligent Solutions for Fresh.

Content Guy's Note: "Fresh Talk" is a new MNB feature, scheduled to alternate on Wednesdays with "Kate's Take."  It will examine all aspects of "fresh," in both the broadest and most focused meaning of that term (depending on the whims of the columnist). "Fresh Talk" is sponsored by Invatron...which you can learn more about here…but which has no input into the subjects covered or responsibility for the attitudes taken.

To get a sense of how fresh foods ought to be marketed and merchandised, one has to go no farther than the Farmers Market that is held on the campus of Portland State University each Saturday morning; I go there every weekend during the summer, and it simply is a delight.

It stretches on for blocks, features a wide and unusual variety of foods, and usually is packed, as you can see behind me. I think it offers some strong lessons for how retailers should approach fresh foods in their stores.

First, there is a sense of plenty - there is an enormous range of products displayed, and not only can you find pretty much anything you are looking for, but you also will find things you didn't know existed and never would have dreamed to look for. One of the things that happens is because there are so many things presented in interesting ways, you're willing to try them … it almost seems unsportsmanlike not to. I have to be honest here: the whole kale thing escapes me, but there is so much of it here that they're even wearing down my resistance.

There's also a real sense of theater - you can hear the music, you can see all sorts of performances, there are cooking lessons, and tons of sampling going on. As far as the latter goes, it isn;t as if this is a new concept; if people think something smells and good and tastes good, they;re far more likely to try it. Except that even today, there are a ton of retailers who simply don't get the importance of sampling, at least not to the extent that people get it here.

Finally, there is wonderful integration of fresh food with different kinds of foodservice - people aren't just shopping for food, but they're also eating. There is a breakfast burrito stand, for example, that routines has a couple of dozen people waiting on line. I was one of them, and let me tell you, it was worth the wait. This is yet another kind of theater, and it works.

If you are going to be in the fresh foods business, it is critical, it seems to me, to work hard to make it a differential advantage through marketing, merchandising, theater, and a real sense of food expertise. That's especially critical today, with competition coming from all directions.

Fresh foods can be a real and differentiated path to success. But you have to do it right, like they do at the PSU Saturday Farmers Market.

Wednesday Morning Eye-Opener: Zapped!

by Kevin Coupe

CNet reports that Amazon-owned Zappos has been testing a new service, called Ask Zappos, that "takes requests via image and works to track down any item, even if Zappos doesn't carry it." According to the story, "Zappos uses image recognition technology to help the stylists find perfect product matches. And Zappos has trained the stylists in the art of spotting brands and products at a glance. So far, they've been delivering responses on the same day they're requested."

The goal of the service the story says, is to "wow the customer" while simultaneously personalizing the shopping experience.

Personally, I think Zappos is capable of just about anything … I have rarely encountered a company that so consistently exceeds the valuer and service promises that it makes to shoppers, sometimes seeming to bend the rules of space and time to get ordered products into customers' hands.

Zappos almost always is an Eye-Opener.

Editorial continues after a word from our sponsor...

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Wegmans Continues Expansion With 10 Stores Planned Over Next Few Years

In western New York State, the Democrat & Chronicle reports that Wegmans plans to open as many as 10 stores over the next couple of years. Wegmans spokesperson Jo Natale says that the plan "is to continue to open new stores in six East Coast states — New York, Massachusetts, Pennsylvania, New Jersey, Virginia and Maryland … In 2015, stores are scheduled to open in Alexandria, Virginia, near Washington; Westwood, Massachusetts, near Boston; and in Concordville, Pennsylvania, which will attract shoppers from Chadds Ford, Philadelphia and northern Delaware."

Wegmans currently has 84 stores.

KC's View: Curious, don't you think, that the one state Wegmans seems to have missed in its run up and down the eastern seaboard is Connecticut? Maybe it is a real estate issue … but you'd think that Wegmans would be able to find a location for at least one of its "smaller" formats.

Amazon Rumored To Be Moving Into Mobile Payments Segment

There is a story on saying that "Amazon could be preparing to launch its own mobile credit card reading hardware in the coming weeks, according to internal Staples documents hinting at such a launch that we’ve obtained.

"According to the documents, Staples stores will prepare next month to stock a new product called the “Amazon Card Reader” alongside existing card readers from Square, PayPal, and Staples’ own in-house brand. The small hardware, which will likely connect to smartphones to process payments, will cost $9.99, according to the Staples internal sales systems…"

KC's View: The site notes that Amazon recently launched an e-wallet and a smartphone, so a card reader could be just the next piece of connective tissue in Amazon's world domination plans.

I will tell you this. I am amazed how many stores in Portland are utilizing Square-type technology … from restaurants to ice cream parlors to bicycle rental shops. It is all the rage here, and very consumer friendly. I am not surprised that Amazon might want a piece of the action, and expect that it might provide some consumer analytics as a lure to get some traction in the segment.

Editorial continues after a word from our sponsor...

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Study: Retail Health Clinics See Expanding Influence, Loyalty

Walgreen is out with a report saying that "consumers are increasingly relying on retail clinics for help managing chronic diseases, such as diabetes and asthma, as well as preventative care," Marketing Daily writes. "The study also reports that loyalty to these healthcare hybrids is growing, with more than half of patients who use them returning in the future."

The study says that "17% of visits to the clinics in 2013 were for preventive services, screening or chronic-illness visits, up from 4% in 2007. And once consumers use these services, they are liking them better: The report says more than 50% made return visits in 2013 and 2012, compared with 15% in 2007 … Walgreens says it also found that visits for health testing increased by 90% for people ages 18 to 64, while overall preventive health visits gained 66% in that time period. And patients over 65 are using the clinics more, with acute visits jumping 84%."

KC's View: To be fair, Walgreen does have some skin in this game, so it will position its clinics as being both efficient and effective at treating not just patients, but a societal need for available, affordable health care. And Walgreen's results do challenge a conclusion by a Harvard Business Review study calling the retail clinics "disappointing … Their growth has been less than expected, they have not expanded care to underserved markets (namely, the poor), and their impact on health care spending — helping to lower it — remains unclear."

But I'm actually willing to accept the basic premise that Walgreen is setting out. The more these clinics become available and accessible to people, the more patients are going to use them … and from my experience, visits usually are pleasant, easy and effective.

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Now back to regularly scheduled editorial...

Market Basket Board Denies Report That It Only Has One Suitor For Company

The Boston Globe reported yesterday that "Arthur T. Demoulas's offer to buy the Market Basket grocery chain is the only bid left on the table, and both sides of the family are furiously negotiating to complete a sale and end the daily losses crippling the company, according to people familiar with the matter."

However, Market Basket's board of directors disputes the report, "saying the board has 'several' alternatives, and suggesting Arthur T. Demoulas is partially to blame for the turmoil at the company."

The board statement said, in part:

"As the Board has previously noted, it is currently engaged in a rigorous and active process to consider strategic alternatives for the Company, including its possible sale. Despite reports to the contrary, Arthur T. Demoulas is but one of several potential buyers for the Company who continue to express a strong interest in purchasing the Company. While Mr. Demoulas’ offer provides a path toward solving many of the problems he has helped to create, it is but one alternative among the options the Board is reviewing. The Board will continue to evaluate all of the alternatives and ultimately make its recommendation to shareholders. However, the Board has no authority or right to force shareholders to accept an offer as that decision rests solely with the Company’s shareholders.”

(In case you've forgotten … The longtime family feud boiled over with the move by Arthur S. Demoulas, to oust CEO Arthur T. Demoulas, his cousin, due to a conflict over the company’s finances. The fight is characterized differently by the two sides. The Arthur S. Demoulas faction argues that Arthur T. Demoulas spends money irresponsibly and refuses to take direction from the board. The Arthur T. Demoulas side maintains that his cousin is fueled by greed, only interested in raising prices, cutting employee compensation, and threatening the formula that has built the company to a New England success story. To be fair, though, this is a battle that goes back decades, and that is beginning to resemble the Hatfields and the McCoys .. except in this case, the townsfolk - meaning the vast majority of employees - have sided with Arthur T., responding with protests and systematic slowdowns of shipments to the company's stores, which have left many of the units almost empty of both food and customers.)

KC's View: I'm not sure how Arthur T. Demoulas can be blamed for all the current problems, since the whole thing got rolling when the board fired him. Then again, the board has seemed tone deaf and clueless almost since the beginning, so I'm sure it would believe almost anything.

I'm also sure it would say almost anything to avoid having to sell the company to Arthur T.

Editorial continues after a word from our sponsor...

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Uber Gets Business-Friendly

MNB has reported in the past about Uber, the care-and-driver-for-hire movement that the traditional taxi cab industry sees as threatening its livelihood. (They're right. It does. But instead of competing, taxi drivers like to do things like tie up traffic and stage protests. While Uber drivers pick up passengers.)

Now, Bloomberg, Uber is getting business-friendly.

"Business travelers will now be able to book rides with Uber Technologies Inc. and pay using company accounts, expanding the potential size of the car-booking market," the story says. "The San Francisco-based company is also teaming up with Concur Technologies Inc. (CNQR), a travel and expense management service, to make it easier for road warriors and their employers to use Uber and track claims, the companies said."

Uber is not alone in expanding its reach: "Uber’s push for corporate customers follows a deal between Airbnb Inc., a short-term room rental service, and Concur yesterday to offer rooms for business travelers. Uber and Airbnb are among a growing number of businesses making up the sharing economy. By connecting individuals with excess capacity or funds with customers seeking alternative services or cheaper deals, the startups are disrupting established industries."

KC's View: Expect the taxi industry to respond with a coordinated, forceful hissy fit.

Editorial continues after a word from our sponsor...

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Now back to regularly scheduled editorial...

NLRB Ruling Leaves McDonald's Feeling Vulnerable

The Chicago Tribune reports that the National Labor Relations Board (NLRB) has ruled that "McDonald's shares responsibility for working conditions with its franchisees who operate roughly 90 percent of its restaurants," a ruling that is significant because "McDonald’s has long maintained that its franchisees are independent owner-operators who set their own policies, including wages." The ruling potentially leaves McDonald's legally vulnerable in case of suits filed against its franchisees.

McDonald's immediately called the decision "wrong," and promised to challenge the decision "in the appropriate forum." And the National Retail Federation (NRF) came out with a statement saying that the ruling "gives a whole new meaning to the word 'outrageous'."

KC's View: I don't know. I'm no lawyer, so I don't understand the ins and outs of franchisee agreements, but from where I sit this NLRB decision doesn't sound all that off the mark. McDonald's controls a lot of what goes on in its franchises, if only because it wants to protect the brand. If it can control the meat they use, the potatoes they use for fries, and the ads they run, why shouldn't they also have enforceable rules about labor?


• The Charleston Daily Mail reports that discount chain Aldi, which currently has more than 1,300 stores in 32 states, "hopes to open between 600 to 650 new stores nationwide in the next five years," at a rate of about 120 new units a year.

Entrepreneur reports that Jamba Juice "announced new incentives to boost franchising, with the goal of adding 500 new stores in the U.S. in the next five years. Jamba Juice hopes to draw in new franchisees and encourage current franchisees to open more shops with a 50 percent reduction in initial franchise fees and a three-year graduated royalty reduction plan … With the new initiatives, Jamba Juice hopes to double its annual unit growth rate. In 2013, the smoothie chain opened 52 franchise-operation locations and two company-owned stores."

Reuters reports that Tyson Foods plans to sell "its Mexican and Brazilian poultry businesses to JBS SA's Pilgrim's Pride for $575 million and use the proceeds to pay down debt from its pending $7.7 billion purchase of Hillshire Brands Co."

• Canadian c-store owner Alimentation Couche-Tard said yesterday that it plans "to acquire 55 convenience stores and related assets from privately-held Tri Star Marketing Inc. for an undisclosed amount in cash," the Wall Street Journal reports. Couche-Tard, "which operates Circle K and other convenience stores, said 51 of the stores are in Illinois and the remaining four in Indiana. The stores currently operate under the Super Pantry brand and offer Phillips 66 and Mobil branded motor fuel. It said the stores will carry the Circle K banner after the purchase closes, but that it intends to keep the existing fuel brands. It will acquire the land and buildings for 54 of the 55 locations, while leasing the single remaining location."

Executive Suite

Bloomberg Businessweek reports that William Morrison Supermarkets has named Andrew Higginson, the former Tesco CFO, to be its new chairman, succeeding the retiring Ian Gibson.

The story says that Higginson's naming increases the "pressure on Chief Executive Officer Dalton Philips to return the grocer to profit growth … Morrison, the country’s fourth-largest grocer, has been hit hardest by the expansion of discounters including German chains Aldi and Lidl, which are luring customers with lower prices and no-frills offerings. Higginson’s most pressing task will be to assess whetherPhilips’ strategy of price cuts is enough to restore market-share growth and increase profit."

Department of Missing Links

Yesterday's Sansolo Speaks contained a link to the results of a four-year study of social media by the Coca-Cola Retailing Research Council of North America, for which Michael Sansolo serves as research director.

However, because of an editing goof on my part, the link was broken. So if you want to see the study, which is available for free, click here).

Editorial continues after a word from our sponsor...

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Your Views

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