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Tuesday, February 09, 2016

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Sansolo Speaks: Born to Keep Running

by Michael Sansolo

Getting on top is never easy. Staying there is even tougher.

Just think about a single day here in MNB like yesterday. We had stories about the serious challenges facing New York retailers Fairway and D’Agostino, as well as the ongoing seeming inability of Sears to connect with any shoppers.

Building a success is a tall order. A brand needs to be distinct, important and somehow adaptable to change - all at the same time. It’s no wonder that building and maintaining a brand overwhelms so many.

Not the Boss though.

I refer, of course, to Bruce Springsteen.

In all honesty, I had no intention of writing about a recent Bruce Springsteen concert that my wife and I attended. I went because Bruce is a personal pleasure of mine and has been since the 1970s, though my wife and I never had been able to get tickets.

But it’s impossible to watch Bruce without appreciating the brand that the Boss has both become and maintained. Bruce manages to convey authenticity, hard work, difference and joy. Taken together, this is a powerful recipe and lesson in success.

Right at the beginning of the concert, Bruce promised a transformative experience and he meant it. As Springsteen fans know, his concerts are always worth the money and ours was no exception. The Boss and his E Street Band played vigorously for slightly more than three and a-half hours; no small feat when you consider that many of the musicians are in their 60s.

What’s more, the 66-year-old Springsteen never takes a break, still manages to repeatedly wander out into the crowd to mingle with fans, dances at times with audience members and even did a short bit of crowd surfing. Yes, the aging process is evident on the faces of the band members, but there’s no sign of fatigue or boredom in their performances.

Bruce’s brand is energy and his performance still brings that. It would impossible to guess how many times he has performed "Born to Run," "Thunder Road" or "Rosalita," yet he manages to do all three as if this were the first time and the audience is the first ever to hear him and sing along. There’s no sense at all that he’s resting on his laurels or phoning it in.

The old adage that "those who love what they do never work a day" seems to apply to the entire Springsteen ensemble.

After all these years of performing and recording, Springsteen has obviously become enormously wealthy and yet still manages to convey a common touch. On his current tour he explains some of the influences of his songs from "The River," including hard family and economic times faced by his own relatives.

And while tickets to his concerts might price out those very same people, he remains outspoken against ticket brokers buying up and reselling his concert tickets at significantly marked up prices. At the concert we attended special precautions were taken to ensure that ticket buyers were the same people appearing at the door. Sure it made for a less-than-easy entry process, but everyone understood why.

A business that understands what matters to customers is what matters most is a brand with staying power. And it’s one that keeps fan like us running to get tickets.

Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.

Tuesday Morning Eye-Opener: Groupon Sells A Sunken Dream

by Kevin Coupe

The Chicago Business Journal reports that Groupon, the online daily deals company, has an intriguing offering for Valentine's Day - it is selling an acre of land on Mars for $15, less than half the original $35-per-acre asking price.

According to the story, "The $15 package includes a land deed, a map with the location of the plot purchased and a Mars info eBook. Never let it be said Groupon isn't all about the thoughtful details that make its deals appealing. And as of today, the deal has appealed to more than 30 buyers, according to the Mars land listing on the Groupon website."

On its site, Groupon describes the offering this way: "Buying land on Mars sounds like a plot line in some futuristic sci-fi flick about billionaires. In truth, it's a modern-day possibility for thousandaires. Buy Planet Mars gives astrophiles the chance to buy one acre of land on the Red Planet. Much like the purchase of a star, Martian Land Packages include a map charting your acre's location, an owner's deed, a NASA report on Mars exploration, and a photo eBook. These packages are issued digitally, meaning they're available for download immediately after purchase."

To which I have to ask ... How you say chutzpah in Martian?

I did a quick check, and was actually surprised that Groupon isn't selling the Brooklyn Bridge. I mean, why not?

And here's the other thing I want to know. Before offering plots of land on Mars, did Groupon and Martian Land Packages check with J'onn J'onzz? Or Mark Watney? Because I would think that this is the least they could do.

Editorial continues after a word from our sponsor...

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At Chipotle Revival Meeting, Leadership Says It Will Maintain Growth Plans

The New York Times reports that, as scheduled, Chipotle closed its more than 2,000 restaurants yesterday until 3 pm EST so it could hold a "virtual town hall meeting" with all of its 50,000 employees designed to allow company leadership to both thank workers for enduring the food safety crises that have beset the company, leading to empty parking lots and declining sales, and to explain one last time the new safety protocols that it hopes will prevent any new occurrences.

According to the story, founder and co-CEO Steve Ells said he is convinced that customers will come back - so convinced that Chipotle will not slow its growth plans this year and also will institute a "$10 million program to help small farmers who are Chipotle suppliers shoulder the costs of putting in place the company’s new food safety system, which will require them to do more rigorous testing."

The Times notes that "marketing experts applauded the company for its transparency about the meeting, but said the company would need to do a lot more to win back the trust of consumers. Chipotle has experienced six food safety failures involving norovirus, salmonella and E. coli since July, with more than 500 customers reporting that they fell ill afterward. Most of those illnesses were associated with two outbreaks of norovirus."

In order to get customers back in stores, the Times writes, "Chipotle has started its most expensive marketing and promotion campaign ever and plans to spend some $50 million to try to lure existing customers back into its restaurants and communicate the steps it has taken to improve its food safety practices. Signs in store windows on Monday, for instance, invited customers to text the company for a free burrito."

KC's View: Lots of brand equity resides at Chipotle, and now it is up to the company not to squander it. Promotions are good, growth is good, but if there are more food safety issues in the near future, it will sour all but the most dedicated Chipotle customers.

Editorial continues after a word from our sponsor...

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Survey: Consumer Optimism Wanes As Gas Prices Fall

The National Association of Convenience Stores (NACS) is out with its monthly consumer survey, concluding that "optimism about the economy plunged to its lowest level in almost a year even though gas prices fell 19 cents last month and are at their lowest level in seven years. Overall, consumer optimism fell three points to 44%, the lowest percentage of Americans who feel positive about the economy since March 2015."

Reflecting the lack of confidence is the fact that "lower gas prices don’t appear to be translating into increased driving or spending. Only one in six consumers (16%) say that they will be driving more over the next month, the lowest level in three years. And only one in five consumers (21%) say they will spend more this month. Millennials are the most likely to increase their driving (30%) and spending (36%)."

The NACS study goes on to say that "millennials are the only group in which a majority feel positive about the economy; 52% of those ages 18-34 report being optimistic compared to just two in five (39%) of those age 50 or higher. Four in five millennials (79%) also say that gas prices affect their economic sentiment, compared to only three in five (62%) of those age 50 or older.

KC's View: If you'd asked consumers a year or two ago how they'd feel about gas prices of $2 per gallon or lower, I think it is fair we all would've said that this would be a good thing for the economy.  The problem, of course, is that low gas prices hurt the profitability of an industry that is important to overall economic numbers, so it drags everything else down. And then, when you add to that the fact that people are not spending the money they are saving on gas, it puts the economy in unexpected and uncharted territory.

And, it probably doesn't help that the political environment is such that there are an awful lot of people out there who benefit from running down whatever economic progress we've made in the last few years.

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Starbucks Plans To Go Big In NYC With New Coffee Center

Grub Street has a story about how Starbucks "plans to open a massive 'Eataly-style' coffee center and has been scouting locations on Fifth Avenue as well as in Chelsea and the Meatpacking District."

According to the story, "Nothing is set in stone yet, but the desired space will be 15,000 to 25,000 square feet, which will give R&D a surplus of space to make up new drinks, and if all goes according to plan it will be similar to the Starbucks Reserve Roastery and Tasting Room in Seattle. Along with this forthcoming coffee center, the company is also looking to expand the footprint of its Reserve shops, through which it hopes to win back New Yorkers who have moved on to more interesting coffee options."

KC's View: The Seattle roastery has become a real draw, so there's no reason to think that New York City cannot offer the same opportunity.

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Tesco Sees Revenue Decrease, But Calls It A Win

Bloomberg reports that in the 12 weeks ending January 31, Tesco's revenue dropped only 1.6 percent, which was its smallest drop since September and possible evidence of "signs of a turnaround at the U.K.’s leading grocer."

At Walmart-owned Asda. however, sales for the period were down more than 3.5 percent, and at William Morrison there were down more than two percent. Sainsbury's sales for the period were up more than a half percent ... but even that increased was dwarfed by the increases at Aldi and Lidl, where revenue was up 14 percent and 19 percent, respectively.

KC's View: It sort of reminds me of US primary politics. Come in second or third or fourth, and you still declare victory.

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Drone Owners Fly High

The Associated Press reports that the Federal Aviation Administration (FAA) is saying that "there are now more registered drone operators in the U.S. than there are licensed pilots."

It breaks down to 325,000 registered drone owners vs. 320,000 licensed pilots in the US. There may, in fact, be more drones than that since many drone owners have more than one.

KC's View: I've been very accepting of the idea that companies may use drones to deliver products ... but I have to say this number scares the hell out of me. After all, how many people own and fly drones but are not registered? And what percentage of the registered base actually knows how to fly these things?

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From WAFC...

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

• Interesting piece in the Dayton Daily News about an appearance by Jim Koch, founder/CEO of the Boston Beer Co., at a meeting of the Ohio Craft Brewers Association. In talking about the continued success of his Sam Adams brand and the burgeoning growth of the craft beer industry, Koch said that he just wanted to create a beer that he would enjoy drinking.

In comparing the mass domestic brews to fast food hamburgers, Koch said, “I just wanted to deliver a filet mignon."

It isn't a business model that works for everyone, but I've always found that if you can provide a product that you yourself would like to use, that's a pretty good starting point.

Fortune reports that Mars Inc. "plans to get rid of all artificial colors from all of its human food products. According to a press release by the company, some of its products are already made without the use of artificial colors, but now it’s expanding those standards to all chocolate, gum, confection, food, and drink. The change will affect over 50 Mars-owned brands including M&M’s, Skittles, Wrigley’s gum, Snickers, and Twix."

The shift is expected to take about five years.

Tulsa World reports that the Oklahoma city is about to see the entry of two new retail competitors - Costco and Trader Joe's - that will look to do battle in a market dominated by 27 Walmart stores and four Sam's Clubs. When they open, the story says, "high-end natural grocers and other wholesalers will face stiffer competition, national and local experts say."

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Executive Suite

• Walmart-owned Asda Group announced that it has named Andy Murray to be its new chief customer officer. He succeeds Barry Williams, who is leaving the company after eight years.

Murray has been serving as senior vice-president of creative and customer experience at Walmart.

KC's View: What are the odds that an executive with the same name as the guy from "The Brady Bunch" would be replaced by a guy who has the same name as the number two tennis player in the world?

Your Views: Unexpectedly Cool

Responding to my comments yesterday about Super Bowl 50, MNB user Michael Stephan wrote:

I like Peyton Manning.  I too was pulling for the Old Gunslinger.

It's just unfortunate that he chose to "sell out" to Budweiser.  Peyton's end of the game interview will forever include his comment, "now I'm going to drink a lot of Budweiser".  How stupid.  How in appropriate for a world class athlete.  For him, I hope the payday is enough money that he can afford to have those words engraved on his headstone.

During the game I hummed the tune to "Nationwide is on my mind".  Now I get to associate Peyton with a last ditch "money grab" from Budweiser.  This totally changes my opinion of him.

For the record, Manning did not get paid to make the Budweiser reference ... and Budweiser execs apparently were surprised (but delighted) by his comments. Manning does, however, own several Bud distributorships ... so the comment was natural.

I understand why folks might be a little put off by his comments, but athletes get paid all the time to say they are going to Disney World. Maybe I'm just becoming numb to it all.

MNB user Craig Bower wrote:

While I didn’t see all of the Super Bowl commercials you referenced in your piece today, I did see the Prius one featuring bank robbers. I recall thinking as I watched it, “What idiotic car company executive approved the ad campaign that ties the Prius to criminal activity (even in jest)?” What was the message – buy our vehicle and outsmart the cops? Why didn’t the ad team film a computer generated sequence in which a Prius is substituted for O.J.’s Bronco? I didn’t like it!

I think that's a little harsh.

I thought the ads were funny, and I have no problem with crooks and thieves being portrayed in a humorous or even sympathetic light. I submit for your approval Butch Cassidy and the Sundance Kid, To Catch A Thief, "It Takes A Thief," Out of Sight, Ocean's Eleven, and The Sting, to name just a few.

Maybe we have to lighten up a bit.

From MNB reader George Denman:

Why isn’t anybody tweeting about the lack of respect by Cam Newton in not taking his skull cap off during the singing of the national anthem?  Being the son of a veteran that served in two wars I was raised to know better.

I missed that, but I think you;re right. He should've taken it off, unless there is some cultural thing going on there about which I am unaware.

I was too busy loving Lady Gaga's rendition.

MNB reader Scott J. Proch wrote:

I’m a 54 year old conservative, who wouldn’t know a Lady Gaga song if it blared from my daughter’s I-phone.  This was the greatest rendition of the national anthem maybe EVER.  I kept my emotions in tact at the party, but looked it up and listened again after the game and it made me cry!

A gentle word of advice if you don't want to look like a 54-year-old conservative. It is spelled "iPhone," not "I-phone."

I'm just trying to help here.

And from another reader:

Ditto on Lady Gaga and the national anthem. Didn’t see it coming. Never would have guessed it – and absolutely loved it.

On a more serious subject, got the following email from MNB reader Tom Murphy responding to a number of stories on MNB:

Anyone besides me seeing a pattern here?  Haggen, Sports Authority, now Fairway…all retail companies with past histories of success getting help from private equity and investment firms.  Maybe this business is a little tougher than just cutting costs to the bare minimum and then throwing out a bunch of growth capital?  Go figure!


MNB reader Howard Carr had some thoughts about Fairway management saying it doesn't have the resources that its competition does:

As a retail real estate practitioner for more than 48years, I find this statement by management most interesting. Not only has the current management team lost focus on how to get out of this dilemma, but it hired a law firm that has had great success (the A & P result would certainly gain my confidence)!!!!!!  To think they cannot compete because their competition has more capital is like telling Google they could not compete vs Microsoft 10 years ago.

This company was focused on its customers and through that concentration became a very serious player in the metro NYC grocery market. Following the buyout, the focus became profits and not the customers. A sure fire route into the bankruptcy courts. Lawyers and fund managers that have no idea on how to run a grocery operation cannot be counted on to run a business like Fairway was. This is like asking a plumber to perform brain surgery.

What a loss!

And, on another subject, MNB reader Karen Shunk wrote:

Your comment about how Amazon should integrate other aspects of the business such as lockers and click and collect into their planned stores is spot on.  I heard Uwe Bald of Hermes Logistics, a division of the OTTO mail order company in Germany, do a presentation at the NRF Big Show in New York last month on the importance of return logistics to a cross-border e-commerce business model (you have to make it easy). 
OTTO competes in a number of markets such as Brazil and Russia where cash on delivery is common.  To facilitate this, they have locker rooms where customers can try on or inspect the merchandise and decide if they will keep it.  If they decide to send it back, the “store” takes care of it right then and no cash changes hands.  I think this would constitute a significant differentiating factor for Amazon stores, who could also incorporate Zappos and marketplace partners into the mix, too.

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Kevin Coupe uses his unique perspective as MorningNewsBeat "Content Guy" and more than 30 years writing about business, marketing and innovation to identify the ways in which consumers are changing, the reasons behind these changes (technology, the economy, culture, demographics), how new and unorthodox competitors are altering the marketing landscape, and what companies need to do to find and exploit differential advantages.

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