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Wednesday, September 17, 2014

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MNB EXCLUSIVE: Kroger Tests New E-Grocery Site

The Kroger Co., the nation's largest supermarket chain, has begun testing an e-commerce site, MNB has learned. The site eventually could be rolled out to all of its banners nationwide, though at the moment it is limited to a one-store experiment that started this week and is being used only by associates.

For the moment the site is called HomeShop, a name that has some resonance for Kroger since it has been used for a home shopping service offered by its King Soopers division on a limited basis for a number of years, even predating the internet. However, Kroger says that it is likely the name will change as the e-commerce program evolves.

Yesterday, the test site could be found at both Kroger.com/homeshop and Kroger.com/comingsoon, but last evening, after MNB spoke with Kroger about the test, the sites were taken down. However, a screen grab of the HomeShop home page can be seen at left.

The test site makes it clear that Kroger is focusing on a store-pick/customer pickup model, calling it "Click & Collect," a name that has been used successfully by Harris Teeter, recently acquired by Kroger, in its Express Lane program.

Keith Dailey, Kroger's director of media relations and corporate communications, said last night that learnings from Harris Teeter jump-started its e-commerce technology and marketing plans. He also said that while Harris Teeter has used MyWebGrocer to power its e-commerce operations, Kroger is using a combination of internal talent and outside companies to develop its site, though he declined to name the outside firms involved. (Full disclosure: MyWebGrocer is a longtime and valued MNB sponsor.)

In an email, Dailey elaborated: "A shop online, pick up in the store model is an exciting opportunity for Kroger and our customers. As you know Harris Teeter has successfully scaled this model in their stores and we are learning a lot from them about it. Our approach with new technologies and systems is to test small and work out the kinks before scaling more widely. We are in the embryonic stages of a click and collect test at a Cincinnati-area store – so early in fact that we just started testing with our associates. We are excited about the potential here and the best I can tell you on timing is to stay tuned."

Kroger is not saying how many SKUs it is making available on the site. While Dailey said that there is a timeline and benchmarks by which Kroger will evaluate its successes, he declined to say what they are.

KC's View: This was not a matter of if. It always was a matter of when. Now we know.

I'm actually a little surprised that it took this long. Kroger had to be a little concerned that companies such as Amazon and Walmart were getting too much of a head start, but senior management at Kroger always has known that it was going to have to get into the e-commerce game, and it has been studying the competition for years, looking for points of opportunity and differentiation.

Lately, if you were paying attention, you could tell that the momentum was picking up … CEO Rodney McMullen was talking about the necessity of investing in e-commerce, the Harris Teeter acquisition put Kroger's online efforts on the fast track, and then the acquisition of Vitacost, an e-commerce site, put another arrow in Kroger's quiver.

What makes this interesting is the way in which Kroger is assembling the pieces of the omnichannel puzzle - it has a variety of bricks-and-mortar formats, it is testing click-and-collect services with a move toward expansion, and then the Vitacost element allows people to order online and have products shipped to their homes or offices via FedEx, UPS or the USPS. Options for everyone.

Add to this the fact that Kroger has an enormous amount of data collected via Dunnhumby, which will allow it to know precisely which customers will respond to which offerings. For example, if it knows the identity of customers that order 40 pound bags of dog food or enormous boxes of diapers, it can target those shoppers as potential online customers, but mix things up with other offerings - all in the quest to be relevant. It won't be the same for everybody, but that's okay with Kroger. In fact, it thrives on making different offers to different people.

That's pretty powerful.

It seems to me that retailers competing with Kroger now know what the task at hand is, because HomeShop - or whatever Kroger chooses to call it down the line - is coming. They better take a page from the omnichannel/relevance book and get busy, or define their other differential advantages clearly and explicitly.

I'm not even sure if it is enough to do it soon. They should have started doing it yesterday.

Just like Kroger.

Kate's Take: Shoe-In-Mouth Disease

by Kate McMahon

There’s a fine line between flattering and affronting the female consumer through cheeky humor, and Nine West just crossed it with a stiletto-heel pump.

In its new store displays and print and social media campaign, the brand is touting shoes for specific occasions, including “Starter Husband Hunting” (leopard print heels paired with an arrow and target) and “Drunch” (for drunk at lunch). Another ad shows a woman with a pair of flip-flops tucked into a Nine West tote for the “Anticipatory Walk of Shame” home after a night spent elsewhere.

The ads are meant to use edgy “girlfriend” humor to appeal to women ages 25 to 49, but social media has largely labeled the campaign “sexist” and “offensive.” Twitter lit up with the hashtag #nonewest and these two Facebook summed it up for many:

“Stupid Campaign 9W. Love your shoes but don’t patronize your customers by an outdated ideal. Women are hunting success and goals, dreams and visions. Not husbands.”

“Seriously out of step, Nine West. On what planet, and in which century, are their target customers living??”

I agree. The circa 2014 single working women I know don’t spend their days plotting to snag a first husband, boozing it at lunch or feeling “shamed” after a evening out. Rather they are focused on career advancement, working through lunch and owning their personal/lifestyle decisions.

And the “First Day of Kindergarten” ad is an insult to mothers who work both in and out of the home. It shows a woman in 4 1/2 inch heel peep-toe booties and crumpled, teary tissues on the floor. The copy reads: “The bus arrived and so do the waterworks. Then it hits you Mommy now has the weeks off. Wipe those sad happy tears.”

Weeks off? Does the term “working mother” mean anything to Nine West? When women make up 47% of the work force, and four in 10 American households with children under age 18 now include a mother who is either the sole or primary earner for her family? Multi-tasking stay-at-home mothers don’t view the start of kindergarten as a vacation requiring high heels, either.

Nine West marketing exec Erika Szychowski told the New York Times she was “comfortable that (the campaign) will make noise and it will get attention, and my gut tells me that it’s not offensive.”

Which begs the larger question that we frequently pose here at MNB: If a company thinks a campaign or product could be offensive or problematic, doesn’t it make sense to canvass a larger audience than the in-house team? (Recent examples: The Hershey logo that resembled the pile of poo emoji, and the utterly appalling Urban Outfitters/Kent State sweatshirt.) Especially when offended consumers can inundate your Facebook page and Twitter in seconds.

Nine West’s Szychowski defended the tone of the ads, saying: “And it’s not just my gut but the incredibly active, large community of people that we work with both internally and externally — it’s actually resonating for them.”

I would agree the campaign has generated noise, but there is more static than a clear message. And I find it hard to believe that not one female employee, whether single, married or a working mother, in that “large community” didn’t raise a hand and say hey, this edgy brand of humor could really put off our customer base. How about a shoe for life occasions such as first promotion, passing a board certification, night out with the girls or Sunday with the family.

Or even better, feature my favorite Facebook response from a customer who sent in a photo of her very chic, fashionable high heels with the caption:

“These shoes just made a presentation in front of 100 men. Shoes can also do such things apart from husband hunting, just the way women can.”

Comments? As always, send them to me at kate@morningnewsbeat.com .

Editorial continues after a word from our sponsor...

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Now back to regularly scheduled editorial...

Wednesday Morning Eye-Opener: Stax & Stax Of Wax & Trax

by Kevin Coupe

On National Public Radio (NPR), Marketplace had a story illustrating the fact that sometimes, the more things change, the more they stay the same…

Vinyl records, the story says, "have experienced a sales boom in the last seven years — going from 1 million to 6 million sales in 2013. This year, vinyl is likely to surpass last year’s total.

"Of course, vinyl sales are still dwarfed by digital downloads. Nielsen SoundScan, which measures point-of-sale of recorded music product, says there were almost 50 billion video and audio streaming downloads in 2013. But vinyl’s resurgence has been dramatic enough in an industry of dwindling sales that record companies have begun to pay attention and, for the first time since the invention of the CD, to increase the number of titles they release on vinyl."

The reason? In general, it seems to be an appreciation of the superior sound that vinyl records offer: "Even outside of the music industry, there is now a jumping on board of the vinyl bandwagon. Urban Outfitters is now one of the nation’s largest vinyl record stores. Even the supermarket company Whole Foods has begun carrying vinyl records is certain markets."

Which just goes to show … even though technology can create massive change within an industry, there remains room for a quality, differentiated experience.

It's an Eye-Opener.

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Now back to regularly scheduled editorial...

Grocery Outlet To Be Acquired By Private Equity Firm

Grocery Outlet, the 210+ "extreme value" food retailer with units in six states, has agreed to be acquired by private equity group Hellman & Friedman LLC, along with its senior management team, from Berkshire Partners LLC.

Terms of the deal were not disclosed.

The announcement notes that the company was founded in 1946 by Jim Read and continues to be operated by the Read family, with third-generation family members MacGregor Read and Eric Lindberg currently leading the business as co-CEOs. Grocery Outlet's store network is managed principally by local, independent operators.

KC's View: The thing that always worries me about these private equity buys is that they'll take their eye off the essential value proposition and try to get bigger margins and profits, which undermines the whole competitive positioning. But maybe that won't happen here, since both the buyer and seller are private equity groups.

Editorial continues after a word from our sponsor...

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From Park City Group...



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Macy's, Bloomingdales To Test Same-Day Delivery

The Chicago Tribune reports that Macy's Inc. said this week that its Macy's and Bloomingdale's department store divisions "plan to test same-day delivery for products purchased on their websites," a move that puts them in "the growing ranks of retailers trying to compete with superfast delivery options offered by e-commerce sites like Amazon."

A total of 50 stores in eight Macy's markets and four Bloomingdale's markets will participate in the test, beginning this fall. "The service will be powered by Deliv, a Silicon Valley-based startup that uses crowdsourced drivers to pick up orders from local stores and deliver them. The maximum delivery distance is 15 miles," the story says.

Pricing for the service has not yet been announced.

KC's View: It is the crowdsourcing of the delivery option that has me a little bit concerned about the efficacy of this initiative. Not that I'm against crowdsourcing on principle, but I think that retailers need to take ownership as much as possible for the whole experience … because the shopper is going to give them credit or blame them for the whole experience, regardless of how it is accomplished.

Putting such a major part of the experience into someone else's hand is risky. You gotta own it!

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From Samuel J. Associates...


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Tesco Tests New Mobile Payments System

In the UK, Marketing Week reports that Tesco is experimenting with a mobile payments service that is described as letting "customers pay for their shopping and earn Clubcard points using their mobile phones."

According to the story, "The PayQwiq service is currently available at 16 of Tesco’s smaller Express stores in London, as well as at 26 of its Express, Metro and Superstore store formats in Edinburgh. It is currently only available to a small number of staff members as part of a trial … In store, shoppers have to scan their items at the checkout, sign in to the app using a four-digit pin and pick which card they would like to pay on. A QR code will appear on their phones which the till scans to pay for the shopping and add any relevant Clubcard points to their account."

KC's View: I think consumers are going to be more than open to this stuff, as long as the security is high and the choice of options is in their hands.

Editorial continues after a word from our sponsor...

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Now back to regularly scheduled editorial...

Exchange Rates: Free Healthy Food Promotion Takes Aim At Fast Food

USA Today reports that HelloFresh, a national fresh recipe-and-meal kit delivery service, is using a new promotion to get customers to try its products instead of fast food - it is telling customers that if they upload a photo of all their fast food receipts from the past year, up to $50, HelloFresh will give them $50 off their first order.

According to the story, "For HelloFresh, it's about winning new customers and market share in the fast-growing but competitive category of home-delivered fresh dinner kits. The ingredients are fresh — and mostly natural. The meal kits, which are delivered overnight on ice, eliminate last-minute grocery store runs for meals. But they require preparation, following step-by-step instruction cards enclosed. It's all about less time spent at the takeout counter and more time spent cooking at the kitchen counter."

KC's View: My big problem here would be uploading those receipts, since I tend to throw my fast food receipts into the garbage out of shame…

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From WAFC...


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NFL Starts To See Some Blowback From Troubled Sponsors

The Wall Street Journal reports that "Anheuser-Busch InBev NV, one of the biggest sponsors of pro football, sent a stern warning to the National Football League, saying it was 'increasingly concerned' by reports of domestic violence by some of its players and that it wasn't satisfied with the NFL's handling of the controversy.

"The statement—the strongest remarks yet from an NFL sponsor—follows calls on social media for boycotts of NFL sponsors, which include CoverGirl and Pepsi and well as AB InBev's Budweiser … While AB InBev and other major sponsors aren't expected to start a run for the exits, the beer conglomerate's public statement will likely increase the pressure on NFL Commissioner Roger Goodell."

The NFL responded with its own statement: "We understand. We are taking action and there will be much more to come."

The NFL has been receiving unaccustomed criticism lately for what it perceived by many as a lackluster, insensitive response to cases of domestic violence, including accusations of both spousal and child abuse against a number of its players.

KC's View: Not sure if it is tectonic in nature, but you're starting to see some cracks in the facade. Just look at how the Minnesota Vikings deactivated, then activated, then once again deactivated Adrian Peterson, who is accused of child abuse. The only thing that pushed them in this direction, I believe, is customer and sponsor reaction.

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The MNB Walmart Watch

• The City Wire reports that Walmart claims that its new Savings Catcher program, which "promises to scout competitor’s sales prices on groceries and selected general merchandise for its shoppers based on receipts scanned into the retailer's shopping app," has saved Walmart shoppers $2 million, and said that immediately after its launch, it was the number one downloaded lifestyle app on iTunes.

FastNewsBeat

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

Forbes has a story about the troubled US shopping mall industry, noting that "there are approximately 1,030 enclosed malls in the United States today according to a recent report by Green Street Advisors, a real estate research firm. They estimate that 15 percent of mall stock will close or be repurposed within the next ten years, with the greatest risk among low-end venues."

But while that's a decent percentage, the story suggests, the fact is that ".S. malls are far from dead, but rather reemerging from deep coma after some dramatic cosmetic surgery." There are malls that are working, and new malls are being built, but the general agreement seems to be that "to succeed, malls must provide a combination of shopping, dining, and entertainment experiences that consumers can’t get elsewhere."

Go figure. Seems to me that's the requirement for success these days for pretty much any retail environment.


• The Chicago Tribune reports that after all the kerfuffle about Walgreen considering a corporate tax-saving move to Europe after it acquired the shares of Alliance Boots that it did not own, the drug store chain has decided to move its headquarters out of Illinois after all.

To Delaware.

The story says that Walgreen will be officially domiciled in Delaware, though its headquarters will be in Illinois. The Delaware move means that it is "following in the footsteps of more than half of the nation’s publicly traded companies."


USA Today reports that Starbucks is testing something it is calling the Frappuccino Mini, described as "a 10-ounce Frappuccino that's a tad lower in price and calories than the conventional 12-ounce version. The test, which is taking place in Denver and Houston, will determine if the mini version expands to other markets."

The story goes on: "For Starbucks, it's always about moving the needle. Something as small -- and inexpensive -- as developing a new size option in a drink can result in consumer excitement, media attention and millions of dollars in additional sales. At roughly $2 billion in annual sales, the Frappuccino -- a blend of of coffee, milk and ice that now has many flavors and forms -- remains one of the coffee giant's most profitable offerings."

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Now back to regularly scheduled editorial...

Your Views: Carbonated Opinions

Regarding a soda tax on the ballots in Berkeley and San Francisco, California, one MNB user wrote:

If the “Soda Tax” does not pass in Berkeley and San Francisco (knowing these areas I will be shocked if it does not pass)  it won’t be because big business is fighting. It will be because the voters are fed up with government telling them what to and not to do. Soda, candy, cake, donuts, juice and even BREAD will make you fat! Everyone knows that. This is not a Sin Tax. Take responsibility for your actions and stop spending tax $’s on these worthless social issues. This tax is very clearly an encroachment on our liberties. I think someone made it very clear when he said “government is not the solution to our problem, government is the problem.”

I'm not a big fan of soda taxes, but I also think we have to be careful not to overstep in our zeal for "liberties."

You're absolutely right that government can be the problem. But when it comes to things like potholes and national defense, it also can be the solution.

MNB reader Brian Carpentier wrote:

The city of Berkley is certainly setting out to a big undertaking with the soda companies and a new tax. Allow me to offer them a compromise: Insure a certain percentage of the soda company offerings are of a sugar free variety. Again yesterday while traveling I tried to get a sugar & caffeine free option in a C-store that had many fountain drinks available. None were available and most were high caffeine. Education & options are usually the answer.

From another reader:

This Carbonated Soda issue is typical liberal selected outrage.   Wonder if Berkeley will ever be half concerned about the 700% increase of toxicity of pot smoking vs cigarettes?  Where is the outrage on that one?




On another subject, one MNB user wrote:

In my opinion the only thing that will get the NFL, Teams and individuals players to become accountable is ‘their pocketbooks’… just like you stated it’ll take pressure on sponsors ! And, I would add, individual people can vote with their own pocketbooks too….. quit buying tickets and see what discipline starts to take effect. We’ve been too willing to turn the other cheek over and over and continue to support this craziness.

This will be a hard one for a lot of people. Me, included. Mrs. Content Guy told me that since she's never been to an NFL game, she'd love tickets to a Jets game this fall for her birthday. I'd move heaven and earth to get her what she wants, but I'm conflicted.

From another reader:

A one game suspension for Adrian Peterson!!! If the facts are conclusive of child abuse the NFL may want to take a page out of the NCAA playbook so team owners deal with the situation appropriately and send a message to players and coaches that this type of conduct will not be tolerated. Perhaps loss of some draft picks for a few years, reduced roster for a few years and no playoff appearances for a few years.

And still another reader chimed in:

Even my 23-year old son made a comment this weekend about the perceived increase of thug-ishness among football players.

And my 80-year old mother is convinced the activity is steroid-related.

I’m not sure either of them is wrong.





We had a story the other day about Whole Foods making a deal with Instacart for a national home delivery program, and I expressed my usual concern about the outsourcing of such an important function. Which prompted one MNB reader to write:

It’s not completely an outsourcing thing … Instacart shoppers will be embedded in specific stores. They will be working with Whole Foods directly in their stores.

Okay. I'm willing to be proved wrong.



One quick note about an email we posted yesterday from a gentleman who expressed displeasure with four meals eaten at Olive Garden. I, like the wisenheimer I am, wondered why anyone would go there four times to be displeased.

Well, as several people pointed out to me, it was just one visit, with four people at the table.

Not my brightest moment, I concede.




Also yesterday, I engaged in a bit of a debate with a reader responding to my rave about John Oliver's "Last Week Tonight" on HBO. He originally wrote:

I watched the first three episodes before concluding it was the most intellectually dishonest show I'd ever seen. That wouldn't be so bad, if he were just trying to be funny. But, he fails at both comedy and edification. Needless to say, I don't watch any longer. Unfortunately, I now think less of you and MNB for heaping such high praise on such insipidity.

My response, essentially, was that I did not think less of him because he had a different opinion … and I suggested that this what's wrong with our political and cultural discourse - people who dismiss and condescend to those who have different opinions.

Well, this fellow was not happy with my response, and sent me another email:

For the record, I don't think less of you because you have a different opinion. It's because I think you showed poor judgment in both your assessment of the show and, more importantly, your desire to laud it on MNB.

Ted Geisel had it right... "as you partake of the world’s bill of fare... Do a lot of spitting out the hot air. And be careful what you swallow."


I don't want to turn this into more of an argument than it is, but ... I'm not sure what the difference is.  You say I showed poor judgment...but couldn't I say the same about you, if I were so inclined?  I think we just have different opinions and different judgments about the show, and different tastes in comedy.  And when you come right down to it, what is MNB if not a place for me to assess, judge, laud, criticize, and express opinions about anything I want to (from A&P and Supervalu to John Oliver and the designated hitter rule) ... and then allow other folks to express their opinions?  

To be perfectly honest,I think the way you are parsing your words - talking about judgment rather than opinion - is just a clever way to say that you are right and I am wrong, rather than that we simply have different tastes and opinions.  Which is neat trick, because it dismisses the opposing opinion rather than considers it.  But, dare I say, it also strikes me as intellectually dishonest and, dare I say, condescending.

But maybe we just have to agree to disagree. I'll go on watching John Oliver, and you can think less of my judgment.

I've had my judgment questioned for far more egregious things.

PWS 28