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Monday, February 08, 2016

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Monday Morning Eye-Opener: Time Out, Game On

by Kevin Coupe

Today's the day or Chipotle.

The Mexican food chain, plagued by a series of food safety problems over the past few months - which apparently have come to an end without anybody being able to say precisely how and why they happened - will keep its stores closed today until 3 pm EST as it holds a company-wide meeting.

That meeting will allow company leadership to both thank employees for enduring the crises that have beset the company, leading to empty parking lots and declining sales, and to explain one last time the new food safety protocols that it hopes will prevent any new occurrences.

I think it is fair to say that Chipotle has a lot on its plate.

The company, which always has focused both on local sourcing and "food with integrity" as its differential advantages, now has to change its approach and move to some degree to more centralized sourcing and control as a way of making sure that new problems do not emerge. Its entire competitive premise has been that local sourcing results in "food with integrity," but recent events suggest that this may be true ... and now it has to find a new path to the same destination. That's not always easy.

As I've said here before, Chipotle's greatest advantage may be a level of brand equity that has a lot of people - many of them young - looking for an excuse to return. I know that my kids keep checking with me to ask if it is safe yet, and I've heard similar things from other Millennials.

They'll probably ask me the same thing today. I think I'll probably say yes, but with some trepidation. I've always liked Chipotle, but I'm not as invested as they are. I can live without it.

Jeff Bezos is fond of saying that at Amazon, "Today is day one."

At Chipotle, to some degree, that's a philosophy they have to embrace ... but they also have to be sure not to forget what's happened in recent days.

I'm not sure the degree to which Chipotle can survive new problems.

Fingers crossed for Chipotle. Today, the company gets a brief time out. Then, it's game on.

What happens next may be an Eye-Opener.

Amazon Said To Be Hiring For San Diego Bricks-and-Mortar Store

The San Diego Union Tribune reports that Amazon "is hiring store managers, booksellers and gadget enthusiasts for an Amazon Books retail store in the 'La Jolla or San Diego area,' according to multiple job listings posted online earlier this week ... The job posts signal Amazon’s growing interest in the offline world, thus far a mostly untouched region for the company where it can extend its customer service prowess to face-to-face encounters, create shelf space for its growing lineup of hardware products and more efficiently handle returns."

Amazon opened a single store in Seattle last year, though its bricks-and-mortar plans got a lot of attention last week when a real estate executive unaffiliated with the company said that it was his understanding that Amazon was looking for 300-400 physical locations. However, that executive walked back the comments a day later, and Amazon has not commented on the speculation.

KC's View: The most important thing to do when thinking about possible Amazon stores is to not assign traditional boundaries to how they work. I still don't think there will be hundreds of units anytime soon, but if they can integrate other parts of their business - lockers, click-and-collect, hardware, maybe even web services - into a physical location, it could end up being something remarkable.

Editorial continues after a word from our sponsor...

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In New York, Fairway Faces Possible Bankruptcy

The New York Post reports that Fairway Market, which has used investment dollars generated by an IPO to fuel expansion in the New York metropolitan area and hoped to move beyond the region, has conceded that it needs "to raise more capital by April to meet its debt obligations with its 15 stores in the metro area experiencing 'significant losses'."

The comments were made in a filing with the Securities and Exchange Commission (SEC).

The story notes that "Fairway is counting on new stores to drive its growth, but conceded in the filing that 'our current limited cash resources and significant leverage will adversely affect our ability to open new stores'." Fairway said in the filing that its competition - including Whole Foods, Trader Joe's, and Ahold-owned Stop & Shop - has "more experience operating multiple store locations or have greater financial or marketing resources than we do."

The Post goes on to note that "the company went public in 2013 after decades of being owned and managed by the Glickberg family. Former CEO Howard Glickberg remains on the board.

"The IPO was meant to jump-start an ambitious expansion plan led by Sterling Investment Partners, which wanted to expand into other regions of the country. Instead, the business, known for its fresh produce and high-quality prepared foods, is facing a possible bankruptcy.

"The company did not respond to calls and emails for comment. But the chain has hired Weil, Gotshal & Manges, the law firm which is known for bankruptcy restructuring and which most recently handled the A&P bankruptcy, industry sources said."

KC's View: Talk about a company that has gone off the rails, apparently driven primarily by financial ambition as opposed to any sort of marketing know-how. This is sort of depressing ... mostly because Fairway was a really innovative retailer that got lost, and for all the wrong reasons.

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D'Agostino's May Close Or Sell One-Quarter Of Its Fleet

The Commercial Observer reports that 11-store independent supermarket chain D'Agostino's "has told state regulators that it may close up to three store locations."

The chain "filed a Worker Adjustment and Retraining Notification on Jan. 29 with the state Department of Labor, warning that it may have to slash jobs at three locations by May 1, including up to 41 jobs at 341 Third Avenue between East 25th and East 26th Streets, 40 jobs at 2828 Broadway, at the corner of West 110th Street and 38 jobs at 528 Third Avenue at the corner of East 35th Street.

G. Robert James, the president and chief operating officer of D’Agostino, confirmed that at least two locations could close and said a third was on the table, but declined to get into specifics." James said that "to take them dark which is not what we prefer," and said that there were other possible options."

KC's View: I feel bad about this, because I like family-owned independent grocers, but I do think that D'Agostino's has to redefine itself in the mind of the consumer and find a clear, 21st century narrative that can give it new life. That's a tall order, but I'm not sure they have any choice.

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Sears, Apparently, Has Very Little Goodwill

Fortune reports on a survey by Prosper Analytics & Insights indicated that just one percent of American women rank Sears as their favorite place to shop for clothes.

Remarkably, more women would rather shop at Goodwill than go to Sears.

The number of women who preferred specific retailers broken down this way: Kohl's, 14.2 percent; Walmart, 11.5 percent; Macy's, 9 percent; JC Penney, 6.7 percent; Target, 3 percent; Ross, 2.5 percent; Old Navy, 2.4 percent; TJ Maxx, 2.2 percent; Forever 21, 1.9 percent; Goodwill, 1.4 percent; Kmart 1.4 percent; Nordstrom, 1.3 percent; and Sears, 1 percent.

The low number for Nordstrom, the story says, is because "the survey was national, favoring mass merchants rather than luxury shoppers, who are fewer in number."

KC's View: When I see references like these, I always remember the interview that New York City Mayor Ed Koch gave to Playboy back in 1982, when he was running against Mario Cuomo for the Democratic nomination in the gubernatorial race. Koch, who was as urban a person as one can imagine (some might say these days that he had "New York values"), made derisive comments about suburban and rural life, talking about "wasting time in a pickup truck when you have to drive 20 miles to buy a gingham dress or a Sears Roebuck suit? This rural America thing -- I'm telling you, it's a joke."

Koch lost the primary race and returned to running New York City. (I suspect he was probably happier for doing so.)

But I digress...

I know the folks at Sears like to make a lot of noise about reinventing the company, but I don't know if it is even possible to do so when the company's image is so awful.

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E-conomy Beat

• The Cincinnati Business Courier reports that Kroger continues to expand the footprint of its e-commerce click-and-collect systems. According to the story, "Kroger has said it won’t add the service in every store. It bases those decisions on location and the likelihood that customers will use the service on frequently traveled routes, such as between home and work."

“ClickList is connecting with our customers in a big way,” Jeff Talbot, Kroger vice president of merchandising, says in a prepared statement. “Our customers tell us they love the convenience and that it saves them time. We are continuing to roll out new ClickList locations as customers become more engaged with our digital offerings.”

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FastNewsBeat

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

Bloomberg reports that Sports Authority is getting ready to file for Chapter 11 bankruptcy protection. According to the story, "Sports Authority is negotiating with creditors as the clock ticks on a $20 million interest payment that it skipped last month on its $343 million of subordinated debt."

Sports Authority has well over $600 million in debt, the story says, as it has "struggled to keep up with competition from old rivals such as Dick’s Sporting Goods Inc. as well as newer entrants like Lululemon Athletica Inc., Gap Inc.’s Athleta and even Amazon."

One likely result of a bankruptcy filing - the closure of as many as 200 of its more than 450 stores.


• The National Grocers Association (NGA) announced that it has given its annual Spirit of American Award, presented to independent grocers who have demonstrated leadership in government relations and community affairs, to Martin Arter, president/CEO of Affiliated Foods Midwest, based in Norfolk, Nebraska.

I was in Norfolk, Nebraska, about a year ago, and was tremendously impressed with the Affiliated operations. I also learned another business lesson there ... which I shared here.


• The Washington Post reports that "Amazon nearly doubled its lobbying expenditures in 2015 versus the previous year, spending $9.4 million dollars trying to sway Congress and executive agencies. The jump puts Amazon’s lobbying efforts in the same league as other tech giants like Microsoft and Facebook -- and reflects how the company’s expanding business interests have raised the stakes of its relationship with the government.

"The issues were wide-ranging from some obvious ones such as online sales taxes and drones. But it also pressed Washington on other matters including computer cloud services, cybersecurity and welfare benefits."


• The Puget Sound Business Journal reports that "Visa users will have to wait a few more months to shop freely at Costco. The switch from American Express to Visa was supposed to happen in April, but now it is being pushed back to 'early summer', Richard Galanti, Costco's chief financial officer said. He said that could mean June, but the date is still fluid.

The reasons, Galanti said, is that "there are millions of members and millions of members' data to move over and it is taking a little longer than expected."

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From WAFC...

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Super Commercials: A Couple of Notes From The Content Guy

It has been interesting to read some of the postmortems about the commercials that ran during the Super Bowl last night, which struck me as a mixed bag. I also thought, more than ever, that reactions to the commercials are highly personal. The baby/monkey commercial from Mountain Dew, for example, seemed to be liked by a lot of people, but its charms were lost on me.

But here were my favorites, in no particular order:

• Jeff Goldblum singing "Moving On Up" for apartments.com ... just because I think pretty much anything Goldblum does is interesting. (Though I suspect 'The Jeffersons" references may have been lost on anyone under 50...)

• The Audi astronaut commercial. Good stuff that made me think about The Right Stuff.

• The domestic violence PSA ... stopped me in my tracks.

• Matt Damon returning this summer in Jason Bourne. Yippee. (I also liked the Captain America: Civil Wars ad, but was less intrigued by the X-Men: Apocalypse commercial.)

• The Prius series of commercials about bank robbers ... which I thought was just great.

• The Snickers commercial with Willem Dafoe and Marilyn Monroe.

• The Doritos commercial about the baby in the womb, which cracked me up. very funny.

• The Coke commercial featuring Hulk and Ant-Man ... which I thought was very imaginative.

Finally, regarding the Amazon commercial for its Echo .... I liked it and thought it was well-produced, but I think they missed their opportunity to make more of the voice recognition technology. In some ways, I think the ad was over-produced ... the Echo is so amazing, it would've been interesting to see Alec Baldwin just sitting their ordering stuff. We didn't need the rest.

The commercial also made me think about something else that may be inevitable - integrating the Echo technology and personal preferences into other venues. Wouldn't it be great if I could talk to my Echo on my iPhone? Once that stuff is all connected, it'll be a big win for Amazon ... and users.

Just thinking out loud here...

One other thing ... I liked the half-time show okay, but I loved Lady Gaga's rendition of the National Anthem.

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Your Views

...will return.

From The MNB Sports Desk

In Super Bowl 50 last night, the Denver Broncos defense dominated the Carolina Panthers offense,resulting in a 24-10 Broncos win.

KC's View: I got a good head vs. heart lesson with this game. I was rooting for Peyton Manning and the Broncos, mostly because when old gunfighters meet up against young gunfighters, I'm almost always going to go with the old guy. (This isn't because of my own age. I always did.) But when it came to picking in my football pool, I took the Panthers.

Big mistake.

It looks like Payton Manning had a Hollywood moment last night. In some ways, it reminds me of the end of High Noon. (I'm glad it didn't end up like The Shootist...)

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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...

"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."
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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.

Want to make your next event unique, engaging, illuminating and entertaining?

Start here: KevinCoupe.com. Or call Kevin at 203-662-0100.

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