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Friday, April 24, 2015

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Friday Morning Eye-Opener: The 3 Most Terrifying Letters In The English Language?

"The Daily Show" did an excellent piece on GMOs earlier this week, with correspondent Aasif Mandvi offering a look at what one of the interviewees calls "one of the most dangerous additives to our food supply in our history," and tracing GMOs back to what might see as an enormous agribusiness conspiracy.

But then...the story takes a turn.

Check it out. I found it to be an Eye-Opener.

Second Ice Cream Company Initiates Total Product Recall

The Associated Press reports that Ohio-based Jeni’s Splendid Ice Creams has recalled all its frozen products, saying that "health officials found listeria in a sample of its frozen treats ... . The listeria was found in a sample of Jeni’s ice cream randomly collected by Nebraska officials at a Whole Foods in Lincoln."

“We will not reopen the kitchen until we can ensure the safety of our customers," said CEO John Lowe.

There is no indication yet whether the listeria discovered before the Jeni's recall is linked to the listeria found in ice cream manufactured by Blue Bell in several plants that is blamed for three deaths. Blue Bell recalled all its products earlier this week.

KC's View: What should be concerning, it seems to me, is the following passage from the AP story:

Listeria ... usually is not found in ice cream because the bacteria cannot grow at freezing temperatures. It is commonly found in processed meats, unpasteurized cheeses and unpasteurized milk, but other foods as well.

I have to imagine that pretty much every company in the ice cream business is busy right now making sure that they won't be the next one in the headlines.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

FSMA Compliance: Are You Paying Attention?

A Note from the Content Guy:

Over the past several weeks, we've been featuring three videos sponsored by ReposiTrak and prompted by new regulations under the Food Safety and Modernization Act (FSMA) that will begin going into effect in August 2015.

You can see those videos below. You can find out everything you need to know at www.ReposiTrak.com.

To reiterate ...

ReposiTrak, a compliance management and track and trace system, has developed an efficient and effective way for companies to do the record keeping that will be mandated by FSMA.

These are subjects we talk about a lot here on MNB - the importance of food safety, and the need for greater trackability, traceability, and transparency.

ReposiTrak has been endorsed both by the Food Marketing Institute (FMI) and Retailer Owned Food Distributors & Associates (ROFDA), which are making it available to their members.

Every company needs to be ready. Every executive needs to be ready.

As stated in the video ... Denial is not an option. And resistance is futile.


Now back to regularly scheduled editorial...

Urban Markets Gain In Appeal For Food Chains

• The Boston Globe reports that Roche Bros. will open its new Downtown Crossing store in downtown Boston next week, in a space previously occupied by Filene's Basement. The store, according to the Globe, "promises to be part traditional supermarket, part take-out food emporium," and will be "the only market of its kind in the neighborhood."

The story goes on: "Offerings at a store that Roche Bros. describes as the neighborhood’s 'first large-scale supermarket' will include charcuterie sandwiches, protein parfait cups, and quinoa-and-kale bowls along with freshly baked cookies made with Calibut dark chocolate.

"Downtown Crossing may be a pedestrian oasis of residents and office workers, but according to research by Roche Bros., it is also a grocery wasteland where deli sandwiches and fresh seafood are as scarce as free parking places."

There won't be any parking lot for the store ... but since pretty much all of the customers will come by foot, that shouldn't be a problem.

"The Downtown Crossing location has no parking lot where customers can load up a minivan with a week’s worth of groceries," the Globe writes. "As a result, the new Roche Bros. will emphasize prepared foods and small portions. Much of the store’s 3,000 square feet of street-level space will be devoted to 'grab-and-go' items for breakfast and lunch, designed to appeal to the large number of office workers in the area. Meanwhile, the store’s 22,000 square feet of basement space -- where brides once engaged in grab-your-dress fights -- will feature a deli, a salad bar, a soup bar, a butcher shop, a seafood area, and an on-site kitchen."


• The Philadelphia Business Journal reports that "after experimenting with an urban grocery concept called Everything Fresh at a small store on Walnut Street in Philadelphia, Ahold USA is reportedly seeking to eventually open eight stores throughout Center City.

"The high-end markets would run from 10,000 square feet to as much as 20,000 square feet though the spaces could be smaller, according to market sources. They would cater to consumers looking for fresh, organic produce, prepared meals and 'kickass prices' as its website says."

In addition, sources tell MNB that Ahold has similar designs on Boston as a market where the small-store, fresh-driven format might work.

KC's View:

Particularly appropriate, I think, that is is exactly the topic on which I focused yesterday on FaceTime ... and I'm including the video here, just in case you missed it.

This is where much of the world is going. (And not just because this is precisely where I want to go.) Young people are returning to the cities, and they have discerning tastes that traditional supermarkets are going to have to adjust in order to be relevant. This is all very smart.

By the way ... thanks to everyone who wrote in yesterday about the Longo's urban market video. Most of you liked it, though there were a few complaints that this week there was no text version accompanying it.

That's a reasonable complaint, I think, and most weeks I'll try to include a text version ... but not always. Sometimes, I think the topic lends itself best to video, and so that's what I'll offer.

The complaints centered on two scenarios - people who were in locations so remote that the internet bandwidth wasn't wide enough for video, and people who work for companies where the systems are programmed not to allow them to do things like go on YouTube.

In the first case, I have to believe that the number of such places with narrow bandwidth is rapidly decreasing, and I have to wonder whether the best business approach is to gear things for the lowest common denominator. This is, I think, an internal discussion in which many of us engage.

In the second case, I have to say that I think it is silly and antiquated for companies to take such an approach. Having access to such sites is what allows people to be in touch with what is really going on in the world, and denying such access is akin to telling people they should not read this newspaper or that magazine. Sure, I guess there may be concerns that people will watch cat videos or other inappropriate videos ... but in the long run, in 2015 and beyond, I think it is far more important to trust and empower your employees. If you think they are going to misuse the assets with which you provide them, why the hell did you hire them in the first place?

Editorial continues after a word from our sponsor...

Corporate Drumbeat

THE MOST IMPORTANT NUMBER...

“For grocers, the most important number is the average number of Top Shoppers per store. For most US food retailers, that means those spending an average of $50 week or more.”…… Brian Woolf - Supermarket Loyalty Expert

Now back to regularly scheduled editorial...

Amazon Grows Sales, Shows Net Loss, But Web Services Shine

Amazon said yesterday that its Q1 sales were up 15 percent to $22.72 billion, though it still managed to show a loss for the period - $57 million.

However, the big news from the company's numbers was the revelation that Amazon's Web Services business - which essentially turned cloud computing into a business - generated net sales of $1.57 billion in the first quarter, up 49 percent from $1.05 billion in the first quarter of 2014.

“Amazon Web Services is a $5 billion business and still growing fast — in fact it’s accelerating,” Jeff Bezos, founder/CEO of Amazon, said in a prepared statement.

The New York Times writes this morning that "Amazon Web Services revenue is growing fast enough that ultimately there would be regulatory requirements to disclose it. Amazon, which tries to reveal the minimum about how it works, merely said the current moment was 'appropriate'."

KC's View: Two things.

First, breaking out the Web Services business means that we're probably getting a somewhat truer picture of the retail business's profitability. So this is a good thing.

Second, it is critical to remember that Amazon could turn a profit if it wanted to ... but that it continues to invest, invest and invest some more, in technology initiatives that it feels it needs in order to stay ahead of the e-commerce pack. While investors are leery about this approach, I actually think that Amazon is making the right strategic decision. If it takes its foot off the pedal, it seems likely that Walmart would do everything it can to take advantage of that seeming weakness.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From MyWebGrocer...



Now back to regularly scheduled editorial...

Instacart Says It Will Begin Disclosing Price Markups

Forbes reports that personal shopping and home delivery service Instacart for the first time "will display the price difference, if any, on products sold both on Instacart and in the physical store where Instacart personal shoppers go to fulfill orders."

According to the story, "Instacart founder and CEO Apoorva Mehta told Forbes in an interview that the change was made in part to highlight partnerships between the company and its grocers, such as Whole Foods and Safeway. Instacart has pivoted away from setting a surcharge on each delivered item (although it still does for many grocers), a practice that could endanger relationships with customers. It now seeks to partner with retailers directly, receiving a fee from them to act essentially as the stores’ own online ordering and delivery service.

"Mehta says the next step is giving his grocer partners control over the Instacart shopping experience. Whole Foods, for example, will eventually be able to more fully brand and arrange its Instacart storefront."

“The way we position ourselves with grocers, we’re their best friend,” Mehta tells Forbes. “We’re giving them one-hour, two-hour delivery which they’ve never been able to do. We’re able to retain the customer for them online.”

Instacart currently generates $100 million in annual sales, and is valued by investors as a $2 billion company.

KC's View: I remain highly dubious about Instacart. in part, I just don't think the numbers add up, long-term. And in part because my sense is that these guys are making it up as they go along ... talk to four retailers, and you may discover that Instacart has made four different proposals to them. This is a market share play, I think, and not sustainable.

But mostly, I think that Instacart is providing a way for retailers to outsource one of the most important parts of the shopping experience to a company that simply has no skin in the game ... it is offering the same delivery service to competitors, and could even deliver competitors' products at the same time.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

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Now back to regularly scheduled editorial...

Chipotle To Offer Burrito Deliveries

USA Today reports that Chipotle "has begun offering delivery for online and mobile orders in 67 cities," a move that "puts Chipotle right in the delivery driver's seat along with Starbucks, which also plans to test delivery service with the very same third-party operator in the Seattle area later this year. Both chains are linking-up with Postmates, an app-based delivery service that works with private contractors, in a sort of Uber-like business model."

The paper says that for the time being, Chipotle deliveries will only be available in Postmates markets. "The delivery service works with about 10,000 private contractors," with three-quarters of all deliveries being by car and the remainder by bicycle. Delivery fees start at $5.

KC's View: Probably smart to offer delivery. But my objections to using a third party to make those deliveries remains ... if there is a problem, where will the responsibility lie? More important, who will the consumer blame? Only one answer to that ... and it isn't necessarily good for Chipotle.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

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Now back to regularly scheduled editorial...

Costco Deal With Citi Visa Means Virtually Zero Acceptance Fees

Bloomberg reports that Costco's deal with Citigroup and Visa means that it will be paying virtually nothing in transaction fees when consumers make purchases using the Citi Visa card. Visa will become the exclusive credit card taken by Costco next year, when it replaces the American Express card; Amex was unable to come to an agreement with Costco that would have extended their longtime exclusivity arrangement.

According to the story, "The arrangement shows the pressure that Costco, the biggest U.S. retailer that accepts just one brand of card, was able to exert on financial firms seeking one of the industry’s most coveted partnerships. AmEx has said Citigroup and Visa won because it wouldn’t agree to the conditions and risks needed to continue its exclusive 16-year relationship with Costco, which is now set to end in March ... While Costco will still incur small fees on Visa cards issued by other banks, incentives from Citigroup and Visa will offset them."

The Bloomberg story notes that "incentives are common in these types of deals and it doesn’t mean Visa and Citigroup won’t profit in the long-run. If customers carry loan balances on Citigroup’s Visa cards, the bank will reap more interest income. The lender will also benefit when customers use those cards at places where fees are higher, and Visa will get the additional volume."

Amex has said that it could not make a similar deal because the numbers "did not add up."

Editorial continues after a word from our sponsor...

Industry Drumbeat

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Now back to regularly scheduled editorial...

The MNB Walmart Watch

CityWire reports that "alleged violations of the Foreign Corruption Practices Act by Wal-Mart has cost the retailer more than $612 million in legal fees and compliance restructuring costs over the past three years." And the tally continues to grow, as various probes continue into charges that Walmart used bribery to grease the wheels of growth in several countries.

Editorial continues after a word from our sponsor...

Industry Drumbeat

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Now back to regularly scheduled editorial...

FastNewsBeat

• Starbucks said yesterday that its Q2 total revenue rose 18 percent to $4.56 billion, and that US same-store sales were up 2.7 percent - helped by a boost both in traffic and average transaction.

Starbucks' Q2 profit jumped 16 percent to $494.9 million.


Reuters reports that "Metro Inc said it was interested in some of the stores being sold by Target Corp , becoming the second Canadian retailer to look at the stores the U.S. retailer leaves behind after its exit from Canada ... Hudson's Bay Co said in February that a joint venture by the company could consider some of the properties vacated by Target Canada."

As the story notes, Target bailed out of Canada earlier this year after a two-year unsuccessful struggle to gain traction there.


• Weis Markets Chairman Jonathan H. Weis yesterday said that his company plans "to invest $92 million in the growth and upgrade of its store base, information technology systems and supply chain."

Your Views: Money Where Your Mouth Is

Got the following email responding to skepticism about the CEO who decided to address the income disparity issue by giving raises in his company so that everybody made a minimum of $70,000 a year:

How many times in every retail company out there does the CEO or division President say, "People are our most important asset," or "a company needs to treat their staff as good or better than they expect the staff to treat the customers?"   The CEO at Gravity put his money where his mouth was.  While this is an extreme example, it is time that CEO's across the country and across the retail spectrum, start acting like people ARE their most important asset and pay them so that they can support their families and have the peace of mind that will allow them to focus on work and treating customers well, rather than how they are going to pay their bills.

Agreed.

From another reader, responding to my comment that I'm not sure that I buy the "this is socialism" argument:

Exactly. The free-enterprise system gives every business-owner the freedom to make stupid decisions.  Socialism means that government forces every business-owner to make stupid decisions.

Of course, your email implies that this is a stupid decision. Which ain't necessarily so.




Got the following email from MNB reader Bryan Silbermann:

Reading your views on the likely big move to click and collect in the US while visiting the  grandkids here in the Auvergne region of France, I had to add a perspective from this side of the pond.

It's astounding to see how quickly the click and collect concept is rolling out across major French supermarkets.  Our son and daughter in law have made the switch enthusiastically, especially as Cora provides no fee pick-up for riders of 20 Euros or more.  The kids seem very satisfied and judging by the ads from every other major chain, they're not alone. They live just outside Clermont-Ferrand (population 230,000) and find the drive through pick up service very efficient and easy to use.


I think it is so cool that MNB is being read in Auvergne...

On a related subject, one MNB user wrote:

Reading about the testing of click-and-collect at Walmart, after successful testing at Asda (which only makes sense, as c&c is much more common on the other side of the Atlantic..

...now going back to the infamous 5 store closures that are all in suburban locations that just MIGHT be a demographic likely to try click-and-collect...

...maybe I'm overthinking, but d'you suppose that these 5 stores might end up being refitted to become click and collect centers?  If they're going to do it like Europe, they'll need multiple drive-through lanes with terminals for sign-in and payment, and the European stores typically have a part of the store dedicated to this business...

If this is the case, then Walmart needs to be backhanded for the absolutely spectacularly bad way they handled it, but it strikes me as possible.


There are always possibilities. I think Mr. Spock used to say that...

Apologies From The Content Guy

...because the site was posted and the Wake Up Call went out very late this morning. There was a technical reason that I could not post that is way above my pay grade ... but I thank you for your patience and understanding.

Editorial continues after a word from our sponsor...

Industry Drumbeat

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Now back to regularly scheduled editorial...

OffBeat: Sharp, Knowing, Funny

It has been a busy, travel-filled week, so I haven't had the chance to engage in much pleasure viewing about which I can report this morning. But ... in the odd few moments, I have had the chance to watch the first two episodes of "The Comedians," the new scripted sitcom on FX.

And it is very, very funny.

"The Comedians" stars Billy Crystal and Josh Gad ("Book of Mormon," Frozen) as versions of themselves, a mismatched pair thrown together to star in a new sitcom on FX. When I say versions of themselves, that's a guess - it is hard to imagine that these two delightful performers are anywhere as mean and self-centered as the characters they portray here. (I hope they aren't.)

There is some resemblance to "Curb Your Enthusiasm," but it doesn't seem derivative. The writing is very sharp if occasionally profane, the performances are knowing, and the old-young odd couple pairing really works. And, best of all, it is laugh-out-loud funny.



Three observations about my visit to Toronto this week.

First, it is amazing how the city has grown since my last visit to downtown, which must have been almost 20 years ago. Wow. It seems like an extraordinarily diverse and sophisticated city (despite some of the political choices made by its citizens), and is just filled with tall, gleaming towers of glass and steel.

Second, I had one of the best Italian meals of my life at a restaurant called Buca - and enjoyed one of the most sublime things I've ever tasted: Parmigiana di Melanzane, which is preserved tomato, the most amazingly light and fluffy eggplant, buffalo ricotta and burrata cheese. I get hungry just thinking about it.

Finally, I went to a Blue Jays game last Saturday. It was sunny and 68 degrees outside. And the dome was closed. Which strikes me as a crime against nature.

Just sayin'...




One of the things I learned in Toronto is that Ontario makes some wonderful wines ... and one of my favorites was the 2012 Flat Rock Gravity Pinot Noir, which is delicious and mouth-filling. Yummy.




That's it for this week. Have a great weekend, and I'll see you Monday.

Slàinte!

PWS 29