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Thursday, October 08, 2015

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FaceTime with the Content Guy: Coupon Conundrum

This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, Kevin Coupe here, and this is FaceTime with the Content Guy.

Great piece in the Washington Post the other day that started off with an observation that really resonated with me - that other than bills and credit card offers, the thing we are most likely to see at least once a month in your mailbox is this...a blue and white card from Bed, Bath & Beyond promising 20 percent off any single item.

The story makes the point that while Bed, Bath & Beyond's sales are up, profits are down - at least in part because people have begun timing their trips to the store around the arrival of this coupon. The value proposition has to do with a discount, not the quality of the merchandise ... and, as the Post writes, when "shopping with a coupon at Bed Bath & Beyond has begun to feel like a given instead of like a special treat ... that’s bad news for the chain’s bottom line."

I totally get this. If we need something there, we don't go unless we have a coupon ... otherwise, we just shop on Amazon. If there's no coupon, why bother?

In fact, as I was preparing to do this story after I saw the Post piece, the one thing I was absolutely sure of was that I'd be able to lay my hands on one of these coupons somewhere in the house. In fact, it took me about 90 seconds.

I would also argue that part of the problem with this strategy is that it seems totally unfocused ... I get the same card, month after month, regardless of how good or bad a customer of theirs that I may be. That strikes me as silly and pointless, in the end, and the same sort of mistake that I think in the end will kill much of the untargeted coupon business, like the FSIs that clutter up the Sunday paper each week. (What will they do when the Sunday paper goes away, as it inevitably will?)

It isn't just the reliance on couponing - and the lack of a value proposition - that has hurt the chain. It also hasn't embraced e-commerce to the degree that some of us would argue that it should have.

Now, the Post also makes the point that the company is trying to rectify the situation .... though there has been no apparent rethinking of the blue card strategy. One of the first lessons I learned when I started to write about retailing is that if you are going to make a price play, you'd better be consistently low ... because if you promise low and deliver medium or high, there's no refuge. And being consistently low is hard, because someone can always undercut you on price if they're willing to lose enough money.

It's a challenge.

Here's what I know. At the very least, the vast majority of retailers need to have something going for them beyond price ... something that differentiates the store so that you're not just attracting cherry pickers.

You also need to attract cherry buyers, because you can build a business on them.

That's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.

Thursday Morning Eye-Opener: Another Circle Of Hell

Article Text.

This week, at least from where I'm sitting, Stephen Colbert is hitting two-for-two.

Yesterday, we offered you a look at a video clip from "The Late Show with Stephen Colbert" in which he had a little fun at the expense of Whole Foods.

Today, we have another piece ... equally funny, but a lot more pointed and even a little vicious. Appropriately so, I think.

The subject is vaping - and Colbert lashes out at a number of things driving the industry, including what strikes me as an unconscionable focus on marketing to young people (with flavors concocted clearly to attract them and turn them into customers as soon as possible).

The comments are, I think, well-aimed and timely.

I've made the point here over the years that I believe that if there is a hell, there is special circle there reserved for the executives who worked for tobacco companies and sold their products even when knowledge about their health consequences were known.

Now, I'm thinking, there may be an adjacent circle reserved for the people working in the vaping business ... and I suspect Colbert may feel the same way.

The jury may be out on the long-term health impact of this stuff. But it isn't hard to imagine that when all the results are in, it'll be an Eye-Opener.

Editorial continues after a word from our sponsor...

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From ReposiTrak...

Now back to regularly scheduled editorial...

Study Shows Growth Of Amazon's Shopping Ecosystem

BloomReach is out with a new study concluding that "a rapidly growing number of consumers now go directly to Amazon when they are shopping for products online ... The portion of straight-to-Amazon shoppers, 44 percent, outstrips the percentage who turn to search engines (34 percent) and significantly eclipses the portion who rely on specific retailers’ sites (21 percent)."

The study goes on to say that "Amazon’s piece of the online shopping pie is impressive, but more impressive is the growth in the share of e-commerce search that the Seattle behemoth commands. Just three years ago, Forrester Research put the percentage of shoppers who went directly to Amazon when hunting for products online at 30 percent."

BloomReach reports that "75 percent of consumers said Amazon does the best job of personalizing the shopping experience," that by a 2-1 margin, consumer said "they don’t understand why their favorite retailers don’t offer the same kind of dead-on, personalized experience that the big search engines do," and that just "44 percent of digital retailers see Amazon as their primary threat."

And, the report concludes, "Taken together, BloomReach’s study presents an alarming picture to digital retailers that aren’t named Amazon. But they also point to a path forward; a path paved with creating a relevant, personalized and pleasant experience for shoppers, across all their devices and in brick and mortar stores."

KC's View: This is the point that I've been trying to make for a while, albeit without specific research to back me up. (I'm more a fly-by-the-seat-of-my-pants kind of guy. I always say, when people occasionally try to describe me as a futurist, that I'm actually just a decent guesser.)

Amazon's broadest strategic imperative is to make itself the first, best choice for almost everything ... and these numbers suggest that it is succeeding.

As for the personalization issue ... I'd refer you to yesterday's "Innovation Conversation" segment, which you can read here.

For competitors, there is a path forward ... but it ain't gonna be easy.

Editorial continues after a word from our sponsor...

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From ProLogic Retail Services...

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Jet Adjusts Its Approach To Building Traffic, Sales

MarketWatch reports that online retailer Jet has decided to drop its plans "to charge a $50 annual membership fee, a key part of its business model," though it will "continue to offer perks like free shipping on orders over $35 and free returns within 30 days."

CEO Marc Lore said yesterday that the reason for the change in strategy is that "the response to Jet's core value proposition has been stronger than we anticipated ... By enabling even more people to embrace this new way of shopping, we believe we can more fully realize our vision of a reshaped e-commerce landscape and deliver unprecedented value to consumers and retailers."

Meanwhile, the Wall Street Journal reports that pricing-data company Boomerang Commerce is out with a new study saying that while Jet often underprices Amazon, it struggles with product selection.

According to the story, "Boomerang looked at 16 categories where both Jet and Amazon sell products, picking out nearly 1,600 items listed as best sellers on Amazon in those categories. It found that Jet had only 31% of those items, though its prices were lower for 73% of the overlapping products."

Referring to Jet's strategic shift on membership fees, the Journal also writes that while Jet had planned "to sell products at up to 15% cheaper than Amazon," Lore now says that "its average product discount will be a thinner 4% to 5%."

KC's View: The Journal story makes clear that, "to be fair, Jet’s site is less than three months old and it is still building up its inventory. The question for Jet is whether it can sustain its value proposition for consumers after changing its business model."

But that's not the only question. Because one also has to wonder how much money Jet will have to raise from investors in order to support the low prices that it will need to attract customers and actually get them to buy stuff and come back.

Editorial continues after a word from our sponsor...

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From MyWebGrocer...

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Research: Millennials Increasingly Dependent On and Engaged With Mobile

Mitek and Zogby Analytics have released new research about the degree to which millennials are engaged with mobile technology. Top-line results include:

• "Forty-two percent of the survey respondents have made a decision on where to spend money or switched companies based on what the organization allowed users to accomplish with a mobile device (up from 36 percent last year)."

• "Last year, more than half said they would pay for goods using their mobile device. This year’s survey found that Millennials have moved beyond wishing, with 86 percent making purchases/conducting transactions from their smart phone, with 11 percent doing so daily."

• "Eighty-three percent think mobile capture (using the camera/images instead of typing) will be part of all mobile transactions in the next five years."

• "Nearly 50 percent said that their smart phone was 'practically useless' without a camera."

• "Twenty-eight percent want to enroll for everything from a new credit card, to a gym membership by taking a picture of their driver's license."

Editorial continues after a word from our sponsor...

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There's Good News, And More Good News

From MNB, May 29, 2015:

USA Today reports this morning that "companies are scrambling to hold on to workers amid a tightening labor market and higher turnover, doling out bigger raises, expanding benefits and providing more training and other perks ... The U.S. unemployment rate last month fell from 5.5% to a near normal 5.4%, helping shift the labor market's balance of power to employees. In March, 2.8 million workers quit their jobs, largely to take other positions, the most since April 2008.

"Companies are responding. Wages, salaries and benefits jumped 2.6% in the first quarter, the most since 2008, according to Labor's Employment Cost Index."

This is just the beginning...and it is both good news and good news. It means that there is competition for great jobs at great companies, and that great people can find great opportunities. But they can't do it alone.

Samuel J. Associates currently is engaged in dozens of searches, matching exceptional talent to great companies that are both national and regional, chain and independent, bricks-and-mortar and online. And we have a singular reputation for identifying and recruiting winners - people who are focused, motivated, savvy and determined to excel.

If you are looking for a change, and for fresh opportunities to make a contribution and embrace new challenges, contact Samuel J. Associates today.

It's time to get to work.

Now back to regularly scheduled editorial...

Haggen To Close Six More Stores, Leaving It With Just 31

Haggen has announced that it plans to sell six more stores, beyond the 127 that it already said would be sold or closed, which will bring to just 31 the number of stores that it will be operating when all is said and done.

The Bellingham Herald reports that "the additional stores are three in Washington and three in Oregon. The Washington stores added to the list are in Puyallup, Burien and Federal Way. The Oregon stores added to the list are in West Linn, Happy Valley and Eugene."

It is just the latest development in a story that has Haggen trying to recover from its ill-considered decision to grow from an 18-store, Pacific Northwest chain to a 164-store regional chain with stores in Washington, Oregon, California, Nevada and Arizona, by acquiring stores made available when Albertsons bought Safeway and regulators required a divestment of stores for competitive reasons. The vast majority of the stores were unsuccessful when reopened under the Haggen name, with consumers complaining about high prices, out-of-stocks, and a general lack of competitive offerings.

Editorial continues after a word from our sponsor...

Industry Drumbeat

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Now back to regularly scheduled editorial...

New Chain To Emerge From Dollar Tree Purchase Of Family Dollar

The Charlotte Observer reports on how, now that federal regulators have approved the $8.5 billion acquisition of Family Dollar by Dollar Tree, 330 stores will have to be sold in order to satisfy antitrust concerns. Those stores are being bought by New York private equity firm Sycamore Partners, which has said it will operate them under the Dollar Express banner.

The sale of the stores must be completed within 150 days, the story says.

KC's View: So let me get this straight ... the Federal Trade Commission (FTC) is insisting on the creation of an entirely new chain, run by a private equity group, that now is going to have to compete with an existing company that has a long track record and existing infrastructure?

Haven't we seen this movie before?

I'm not saying that Dollar Express is the same as Haggen was after it acquired more than 140 stores that were divested after Albertsons bought Safeway. (Haggen has, of course, subsequently imploded.) But I am saying this kind of stuff is making me increasingly skeptical about whether the results are going to match expectations.

Amazon Unveils New Arts-and-Crafts Site

The New York Times this morning reports that Amazon has opened an online arts-and-crafts store, Handmade at Amazon, "that squarely takes aim at a niche but growing market dominated by the Brooklyn-based Etsy."

The new marketplace, according to the story, features "over 80,000 items from about 5,000 sellers in 60 countries. The marketplace lets artisans peddle their handmade wares — think walnut cuff links and felt pennants — much as Etsy has done."

The story notes that "since 2005, Etsy’s handicrafts marketplace has grown to $2 billion a year in sales, showing that a lucrative market exists for knitted socks, upscale pet furniture and a plethora of other quirky, handmade merchandise."

E-conomy Beat

Bloomberg reports that " Inc. is exploring the creation of an online pay-TV service to complement its existing video offerings and has reached out to major media companies including CBS Corp. and Comcast Corp.’s NBCUniversal about carrying their channels, according to people familiar with the matter ... A live service would expand the online retailer’s role in video entertainment and bring it into direct competition with pay-TV providers like Comcast and AT&T Inc. Other companies are offering or experimenting with bundles of channels delivered over the Internet, including Sony Corp., Dish Network Corp. and Apple Inc."


• The New York Times reports that SABMiller, the world's second largest brewer, has rejected a $104 billion informal takeover bid by the world's largest brewer, Anheuser-Busch InBev, saying that it undervalues the company.

The Times writes that "under British takeover rules, Anheuser-Busch InBev must make a formal offer by Oct. 14 or walk away for six months, in what the deal-making industry calls the 'put-up-or-shut-up' mandate. If the beer giant wants to avoid waging a potentially costly hostile bid or dropping its pursuit for now, it must entice its reluctant rival to enter merger talks by then."

• The New York Times writes this morning that "Diageo and Heineken said on Wednesday that they had agreed to an asset swap related to their beer businesses in Ghana, Jamaica, Malaysia and Singapore, resulting in a cash payment of $780.5 million to Diageo ... Heineken, the Dutch brewer of Amstel and Sol, will acquire Diageo’s 57.87 percent stake in Desnoes & Geddes Limited, the Jamaican brewer of Red Stripe and Dragon beers."

And, the story says, "Heineken will hold a 73.32 percent stake in Desnoes & Geddes after the deal, and it will make an offer for the remaining shares it does not already own. It will also acquire the licensing and distribution rights to Red Stripe and Dragon in Britain, Canada and the United States from Diageo beginning in January, Heineken said."

Your Views

...will return.

From The MNB Sports Desk

Chicago Cubs pitching ace Jake Arrieta threw an 11-strikeout, zero-walk, four-hit shutout last night in the National League Wild Card game, powering the Cubs to a 4-0 defeat of the Pittsburgh Pirates. The Cubs now go on to face the St. Louis Cardinals in the best-of-five NL Divisional Series.

Finally, a word from our sponsor...

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The Reviews Keep Coming In...

"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)

With a uniquely fast-paced, provocative and entertaining approach, Kevin Coupe identifies 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: Or call Kevin at 203-662-0100.

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