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Wednesday, August 24, 2016

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Wednesday Morning Eye-Opener: Fallen Apple

by Kevin Coupe

The Daily Beast has a story about a New York City store called Tekserve, described as being in many ways the first Apple Store - an independently owned, 25,000 square foot store on West 23rd Street that serviced Apple products long before the computer company got into the retail and Genius Bar business.

"Until the all-conquering advent of the Apple stores—of which there are now seven in New York City—Mac users would deliver their sick and malfunctioning machines to the deft fingers, efficient aid, and warm, concise counsel of the experts of Tekserve," the story says.
But now, 29 years after it first opened, Tekserve is closing its doors for good, and auctioning off the "vintage and esoteric gadgetry" collected by co-founder Dick Demenus over the years.

The sad reality is that the world has changed.

"I love my business, and it’s sad that it can’t make it in this environment,” Demenus tells the Daily Beast. "It’s kind of inevitable. Rents are going sky-high, and it’s a tough business environment for what we do. We're bricks and mortar and up against the internet and seven Apple stores. And we started out as the Apple store.

“Now you can buy a Mac almost anywhere, like the Best Buy on the corner. The internet is the big nail in the coffin. The overhead for that business is so low. They’re in the middle of nowhere. We’re in the middle of Manhattan and we’re one location, so volume is necessarily low, so you can’t compete on price.

“Apple does a good job with servicing now, and computers have become more like appliances, and more reliable and cheaper. There’s less demand for our service. If a computer fails after three years, now you think, ‘Maybe it’s time to get a new one.’”

The store may be closing, but the lesson is an Eye-Opener.

FDA Posts Final FSMA-Human Food Rule

The US Food and Drug Administration (FDA) said yesterday that it has finalized the Food Safety Modernization Act (FSMA) Preventive Controls for Human Food rule, which it described as "the product of an unprecedented level of outreach by the FDA to industry, consumer groups, the agency’s federal, state, local and tribal regulatory counterparts, academia and other stakeholders."

In addition, FDA set compliance dates for some businesses, starting in September 2016.

FDA said that "the final rule has elements of both the original and supplemental proposals, in addition to new requirements that are the outgrowth of public input received during the comment period for both proposals. For example, flexibility has been built into key requirements, including control of the supply chain, and the definition of farms - which are exempt from these regulations - has significantly changed to reflect modern farming practices."

You can read the detailed DA posting here.

In a statement released after the FDA announcement, Hilary Thesmar, vice president of food safety programs at the Food Marketing Institute (FMI), "While the Preventive Controls rule embodies one of the basic pillars of FSMA, which is to thwart the contamination of food and to prevent foodborne illness from occurring, food retailers are well aware that prevention starts with strong good manufacturing practices followed by conducting a rigorous hazard analysis to identify and evaluate any known and reasonably foreseeable hazards.

“FMI appreciates FDA's acknowledgement that the ‘relatively rare occurrence of significant safety concerns associated with the manufacture of food contact substances,’ and finished products, together with FDA’s extensive premarket review of these substances, provides adequate assurances of safety."

And Tom Stenzel, president/CEO of the United Fresh Produce Association, released the following statement: “The extension and clarification of compliance dates released yesterday by FDA, combined with the draft guidance documents released yesterday and today, enable the fresh produce industry to better understand how to comply with the applicable rules. We appreciate that FDA heard and responded to our concerns and requests.

"FDA recognizes that packinghouses should have the same amount of time to prepare for regulatory compliance regardless of whether they are located on or off a farm. The extended compliance dates for packinghouses subject to the Preventive Controls Rule, beginning January 26, 2018, allows us time to continue to work with FDA and the Food Safety Preventive Controls Alliance to develop a modified curriculum for these unique types of operations that are critical parts of the fresh produce supply chain. With the first compliance deadline for the Preventive Controls Rule less than a month away, our members continue to ask questions about which rule(s) they are subject to. We are hopeful that the draft guidance pertaining to industry classification for farms and facilities released today will provide examples that help the fresh produce industry understand which rules apply to them."

KC's View: It seems to me that the FSMA rules are at once both highly complex and fairly straightforward ... complex because the food system is amazingly complicated, and straightforward because people and companies have no choice but to comply with both the rules of conduct and rules of transparency.

The details of the continuing FSMA rollout are way too complicated to go into here, but companies need to be sure to be absolutely in compliance - or be branded as bad actors.

I want to repeat something I've said here at various times about the new FSMA rules...

I'm very careful about mixing church and state here on MNB ... which means talking about a sponsor within the context of editorial. But in this case, there is a direct connection, and I want to be both transparent and informative.

ReposiTrak, which has created automated information management technology that allows companies to do the things necessary to comply with evolving FSMA regulations, is a longtime MNB sponsor ... and we've been running a series of videos from ReposiTrak here that have interviewed CEOs such as Kevin Davis of Bristol Farms and Karen Caplan of Frieda's who have been proactive ands progressive in their approach to this issue.

I hope you'll check it out; it was my pleasure to produce these videos, a task I welcomed because this is a serious issue that requires an industry-wide focus.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From ProLogic Retail Services...


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Student Debt Crushes Potential For Retail Growth

CNBC reports that "student debt obligations are growing faster than the average salaries for recent graduates, and require an estimated $160 billion in annual payments, according to new analysis from Moody's. That's $40 billion greater than Amazon's annual revenue, and is larger than the combined yearly sales of Home Depot and Lowe's."

The story goes on: "The velocity of growth tied to student loan debt is "staggering," having more than doubled from $580 million in 2008, Moody's said. That comes as the average salary for recent graduates has edged only slightly higher.

"Meanwhile, the largest holders of student loan debt are now Americans between ages 30 and 39, who have historically been the biggest spenders." And the Moody's report suggests that the only retailers that stand to benefit from this trend are stores that can credibly and consistently establish themselves as being discount-driven.

KC's View: Two things here.

One is that the story suggests that the only thing that may be able to derail this trend is some sort of government intervention. While I think the problem needs a systemic fix - it can't be just reducing the cost of college loans, for example, or just making community college free - I don't have a lot of confidence that the government we have or will have is going to be able to come up with a cohesive and competent approach to making college more affordable.

The other is that I'm not entirely sure that it will be just "discounters" who will do well in this environment. I think the better play is to be value-driven ... which is to say being conscious of cost, but also able to convey something aspirational. Because the thing about these people with student debt is that they went to college ...

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From ReposiTrak ... A New CEO Spotlight Series...



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SpartanNash Signs Migrant Labor Fair Food Pledge

The Grand Rapids Business Journal reports that SpartanNash has signed what is called the Migrant Legal Aid’s Fair Food Pledge, described as "a pact for fair labor practices for migrant and seasonal farmworkers."

According to the story, "The pledge means SpartanNash will work with Grand Rapids-based Migrant Legal Aid when suppliers show signs of unfair and unsafe work conditions for workers.

"SpartanNash sources from 250 Michigan farms for its 160 stores and 2,100 customers," and "Michigan is the second-most diverse state for agriculture, behind California, with 45 crops harvested by migrant and seasonal workers annually, according to SpartanNash."

Larry Pierce, EVP of Merchandising and Marketing at SpartanNash, said that the company wants its customers "to know that our company is committed to providing them with produce that has been harvested under safe and equitable working conditions."

KC's View: Beyond the specifics of this pledge, the signing points to the desire by a growing number of consumers to know more about the food they eat and feed their families - how and where it is grown, and what is in it. Not being transparent will increasingly be seen as obfuscation, or irresponsibility.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From MyWebGrocer...


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Best Buy Realizes That The Future Is Now

Bloomberg reports that Best Buy's "quarterly financial results Tuesday were downright Amazon-like: consecutive quarters of double-digit online sales growth. Hot new products including virtual-reality headsets and techie watches. Words like 'exploration' and 'experimentation.' Gone were the store-closing announcements of quarters past, along with talk of bad weather or other tired excuses for why consumers aren’t shopping (many of which we’ve heard from Target, Macy’s and other retailers in recent weeks)."

The story notes that Best Buy is benefitting from the weakness of some competitors, as well as the closing of its own underperforming stores, and "looks like it’s finally learning a thing or two from some of its biggest vendors, such as Apple. On Tuesday it outlined a series of pilot programs that sounded Apple-like, including classes on Wi-Fi use and digital photography.

"Another initiative pulls a page from former Apple store mastermind Ron Johnson’s new startup, Enjoy, which sells high-end consumer electronics online but provides free in-home installation and setup. Best Buy said it’s testing a similar in-home adviser program, as well as on-demand, same-day services for those who need immediate tech help.  Perhaps more important, it has plunged resources into a more-streamlined online checkout process, faster shipping and better website features such as consumer reviews and product recommendations."

While Best Buy may be coming to some of these innovations a little later than companies such as Apple and Amazon, Bloomberg writes that "it seems Best Buy has finally realized it’s 2016."

KC's View: Interestingly, the Star Tribune has a story about how Best Buy is testing a new concept called Best Buy Tech Home in the Mall of America, described as a way of "showcasing some of the latest technology it sells in a house of sorts ... Inside are several rooms - a kitchen, living room, office and bedroom - outfitted with smart products. The idea is to show consumers how doorbells, lights, music, home security and even refrigerators can be controlled from a smartphone or tablet and how it could make their lives easier or better."

This is just an example of how companies need to consistently innovate and test new ideas, lest they end up like Howard Johnson's, A&P, Kmart and other retailers of that ilk.

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Industry Drumbeat

From the National Grocers Association...


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And Then There Was One

The Associated Press reports that one of the two remaining Howard Johnson's restaurants in the country - located in Bangor, Maine - will close in a couple of weeks, leaving only the one in business operating in Lake George, New York.

The story notes that author Stephen King used to be a regular there, but in recent years business has slowed to the point where hours were being cut back and the restaurant stopped serving dinner. And, amazingly, one employee - 68-year-old Kathe Jewett - has been there since the HoJo's opened in 1966, and will be there on the last day of operation; it is the only job she's ever had, and even she concedes that "it’s nothing to be sad about ... I’ve been here for 50 years, and it’s time.”

The AP writes that the Howard Johnson's restaurant chain started in 1925, "once numbered more than 800, with the New England-based restaurant chain predating the ubiquitous Howard Johnson hotels."

KC's View: I think I've written about this before, but there used to be a Howard Johnson's restaurant and motel in my town that were just awful. The restaurant seemed like a food safety disaster just waiting to happen, and the motel was a place for hookers to hang out so they could service truck drivers using nearby I-95. They got torn down a few years ago, and were replaced by a Whole Foods and a BMW dealership ... a lot cleaner, and offering different kinds of service.

The larger lesson of Howard Johnson's, I think, is the much the same as applies to companies like A&P and Kmart - companies that simply never pivoted to find new ways to be relevant to a changing consumer. Companies simply cannot afford to operate this way, especially at a time when the pace of change seems to be accelerating.

I will say this, however. I'm going to be in Lake George in about a month for a speech, and I'm going to stop by the one remaining Howard Johnson's that is located there. I mean, what the hell ... maybe I'll be surprised.

Editorial continues after a word from our sponsor...

Industry Drumbeat

From the Network of Executive Women (NEW)...

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Judge Rules Starbucks Actually Can Put Ice In Iced Drinks

BuzzFeed reports that "Alexander Forouzesh, a Los Angeles resident and defender of the people, has lost his legal battle to stop Starbucks from filling its cups with too much ice. That ice, his lawsuit alleged, robbed thirsty customers of the precious ounces of fluid they paid for and are entitled to." A California judge has dismissed the suit, saying that "a reasonable consumer would understand that the iced beverage that consumer might order from Starbucks will contain some portion of liquid and some portion of ice.”

However, the story also notes that "Starbucks isn’t in the clear just yet. There’s another ice-related lawsuit against the coffee chain in Illinois, and 'two claiming it underfills hot drinks by over-aerating the milk'."

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Corporate Drumbeat

From Samuel J. Associates...Why Career Success Is Not A Shiny Car

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FastNewsBeat

• The Orlando Sentinel has a story about how "groceries are seeing more customers coming in for a quick meal — and these so called 'grocerants' (grocery-restaurant hybrids) are adding restaurant-style options ... In-store dining and take-out of prepared foods from grocers has grown almost 30 percent since 2008, according to a recent NPD study. Last year, NPD said, shoppers made 2.4 billion visits to grocery stores and other food purveyors, resulting in $10 billion in consumer spending."

The story suggests that it is the retailers that invest in creating more relevant experiences - and better food - that will be the one who will find themselves with differential advantages in an increasingly competitive retail market.

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Industry Drumbeat

Energize your Digital Circular

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RIP

Steven Hill, the classically trained New York stage actor (he was in the original Broadway cast of "Mister Roberts," with Henry Fonda) who late in his career became best known for playing New York District Attorney Adam Schiff on the original "Law & Order," imbuing the role with a high level of weary yet resolute moral authority, passed away yesterday at the age of 94.

Most people don't realize that Hill also was the original head of the Impossible Missions Force when "Mission: Impossible" debuted in 1966, playing Dan Briggs during the show's first season. Hill left the show because of a dispute with producers; born Solomon Krakowski, he'd become an Orthodox Jew and had it written into his contract that he would be able to leave the set before sundown on Fridays so he could observe the Sabbath. That proved unworkable for the shooting schedule of a prime time television series, Hill was unwilling to compromise his faith, and he was replaced by Peter Graves as Jim Phelps in the second season for the rest of the series run.

After "Mission: Impossible," Hill left acting for almost a decade, and in that time shifted from being a leading man to a character actor, and ended up playing a range of roles in movies that included Yentl, Legal Eagles, The Firm, Running On Empty, Billy Bathgate, Eyewitness, and Heartburn. All of those films, as well as "Law & Order," managed to accommodate his religious beliefs into their shooting schedule.

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Industry Drumbeat

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The Path to Purchase Expo, the world’s largest gathering of shopper and retail marketing professionals, delivers solutions and strategies for engaging shoppers and driving retail sales.

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Your Views: Honest-To-Goodness, Kentucky Fried Opinions

Responding to Michael Sansolo's column last week about the e-commerce threat, one MNB user wrote:

I met an honest-to-goodness Millennial this weekend — a 29-year-old friend of my son who is a PhD student at the Wharton School. His wife is a PhD student at Penn. I know PhD students are not exactly brimming with ready cash (my daughter is one, too). So I was a little surprised when he said that they get all their groceries from Fresh Direct. He wasn’t the least concerned about the fee he pays to have groceries delivered to his center city apartment in Philadelphia, and said it was so much better than going to the supermarket and having to drag the food home. He also mentioned that he saved them “15 or 20 minutes” in the store. I think your concern about e-commerce as a threat to bricks-and-mortar is not at all wrong. A demographic that will one day have some real money to spend looks like they are spending more and more online.



We had a piece the other day about how Walmart is testing a system of dealing with shoplifters that depends on a private kind of justice rather than going through law enforcement. (And we don;t mean taking them out and shooting them.)

One MNB user remarked:

At some levels this appears to an idea that should be given serious consideration until the part that shoplifter pay an undisclosed sum" is there a provision for a WalMart debtors prison? Could this evolve into a profit center for WalMart ? Who runs the local program, what are their qualifications or will it be just another undertrained department manager?




MNB took note the other day of a Time reports that Amazon is testing a new concept in Japan, where it will allow people watching a new cooking show on its prime video streaming service "to order some of the food featured in the episodes" using Amazon's 1-click technology. It seemed to me that this is a very smart idea, and one MNB user agreed:

Amazon could take it to the next level by providing the food as a pre-packaged meal with instructions (a la Blue Apron), so the viewer could replicate it at home. Serving for four, with maybe 2 as an option. Seems like a no brainer to me.




We had a piece the other day about a new restaurant concept called Organic Coup. One MNB user wrote:

I had the opportunity to try the Organic Coup in Pleasanton this week. The menu is very limited. You can have a sandwich, wrap or chicken nuggets with your tater tots or popcorn with organic drink options. I chose the sandwich and I was impressed that the sandwich was very juicy and flavorful. The service was quick and friendly. If I had the chance, I would go again. I am not sure I would go very often if I was close to a location given the limited menu but it would make the lunch rotation.




And finally, regarding KFC's newest innovation - suntan lotion that is supposed to smell like crispy fried chicken, one MNB user wrote:

Maybe it’s just me, but I’m not sure I want to smell like fried chicken while bathing in the hot sun.  Brings to mind the Seinfeld episode with Kramer using butter.  I’m just saying . . .

It is not just you. And I'm very sure.

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Industry Drumbeat

Topical, relevant, engaging, thought-provoking...Who could ask for anything more?

When Kevin Coupe gets on stage in front of your company meeting, association conference, or any other event, the pace is fast ... the thoughts are provocative ... the focus is innovation ...the style is entertaining and interactive ... and the reviews are glowing...

"Kevin inspired our Stew Leonard's management team with his insights about the food industry and his enthusiasm. We've had the best come in to address our group, and Kevin Coupe was rated right up there.  He had our team on the edge of their chairs!"
- Stew Leonard, Jr., CEO, Stew Leonard's

"Our sales organization is a very skeptical bunch, and your presentation was both topical and relevant. The content was right on to address the meeting theme, and was presented in way that kept the audience enthralled. I had quite a few positive comments at the break, something that does not happen frequently. We appreciate the time and effort to help make this sales meeting one of the best we have had in several years."
- Jon Kramer, Chief Marketing Officer, WestRock Merchandising Displays

“Kevin’s presentation to our Phoenix group was very well received! The topic was very relevant to all the retailers in the room, with just the right amount of humor. The icebreaker at the beginning, and the personal interaction at the end was truly engaging!”
- Cathy Kloos, Director of Human Resources, Albertsons Safeway

“Kevin was an engaging speaker whose stories really brought the concepts to life. Although his lessons were focused on retail rules to achieve business success I found the lessons could be directly linked to enhancing my leadership style. “
- Jessie Thomas, Director Merchandising Solutions, MDM and PMO, Petsmart

And there's more...

"Your presentation was well-received, very thought-provoking and was a great lead-in to the overall theme of our show."
- Tim Myers, CMO, Affiliated Foods Midwest

"Your presentation was unbelievable – everything we hoped for and much, much more!  Thanks for making our customers (and us) better!"
- Joe Himmelheber, Director of Marketing and Merchandising, Caito Foods

"Both of your presentations kept the audience engaged ... This was a difficult subject, but you made it easy to understand - and learn from. Everyone who has not yet seen one of your presentations, should know how informative and to the point your program is and how it will definitely enhance their event. "
- John M. Dumais, president/CEO, New Hampshire Grocers Association

"Kevin is an engaging speaker who really brought the content to life.  He customized his program to meet our needs to ensure our event was a success!
-Kim Richardson-Roach, Network of Executive Women (NEW), New England Region


"The response to this session was overwhelmingly positive. The audience appreciated the lively and enlightening exchange between the moderator and panelists ... the spark you added to the panel as moderator contributed to the flame of excitement this event engendered ... Thank you for helping ground the material in a reality readily recognized ..."
-Leslie G. Sarasin, President/CEO, Food Marketing Institute (FMI)

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.

Want to make your next event unique, engaging, illuminating and entertaining?Start here: KevinCoupe.com. Or call Kevin at 203-662-0100.

Now back to regularly scheduled editorial...

Your Views

...will return.

PWS 28