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    Published on: September 13, 2012

    This commentary is available as text and video; enjoy both, or either. Past "FaceTime" commentaries are available on the MNB YouTube Channel, which can be accessed here.

    Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy.

    I'm in Florida right now; I had the opportunity this week to give a speech to the Florida Agricultural Financial Management Conference. It was an interesting gig for me, because I have no agricultural talent at all (and perhaps the brownest thumb in existence), and my wife will tell you that my financial management skills are not exactly world-class. But the folks who invited me apparently have a sense of humor, and it was an interesting opportunity to talk to an unusual audience about some of the things that I'm seeing that suggest profound change in the culture, which means that profound change needs to come to the food industry.

    It is interesting to see change all around. Before coming to Florida, I was in Chicago, and one of the things I saw there was what is being billed as a "cupcake ATM." A cupcake retailer called Sprinkles has come up with what I think is an ingenious idea. In front of the Chicago store - and one in California - they've installed what essentially is a vending machine for cupcakes. it is open 24 hours a day, so if you get a midnight craving, you can satisfy it; at the same time, the retailer can put all of the stock left at the end of the day out in the machine, so there is less shrink. Or, if you get to the store and there's a big line, as there often is, you can use the vending machine as an express line.

    The cupcakes are a little pricey, but that seems to be the trend right now, and there is no shortage of people to pay through the nose for a gourmet cupcake they can put in their mouths. I tried it - for research purposes, of course - and while I was impressed with the concept, I was less so with the product. But I'm assuming that this is because when I was there, all that was available was gluten-free cupcakes, and I'm reasonably certain the box the cupcake came in would have been moister and tastier.

    Another new experience I had when I was in Chicago was when I went to a local Citibank to get some cash from an actual ATM. Once the transaction was done and I had my money, the machine, as it always does, asked if I wanted a receipt or not. Except this time it offered me a new option - I could have the receipt emailed to my email account. Never saw that before - and It makes a lot of sense. It saves on paper, and makes it much easier for me to track things on my laptop. I know that the Apple Store has been doing this for some time, and I think it ought to be an option that every retailer ought to offer ... among other things, it would be a great way for them to gather and track email addresses from people willing to provide them.

    Finally, as I was leaving Chicago, I got the most amazing surprise at O'Hare International Airport's United Airlines terminal - I found that I somehow was qualified for the TSA Pre-Check system. (I'm thinking it is because I'm a million-mile flier on United.) It meant that I had to put my iPhone into my briefcase, put it and my duffle bag through an x-ray machine, without taking out my toiletries. I was able to then walk through the scanner with my shoes on and without taking anything out of my pockets.

    It was great. It was even easier than using Clear, the private expedited security system, which I've always liked - especially here in Orlando, where the security lines are almost long and there are so many people on them who act as if they've never been in an airport before.

    And it just shows that it is possible to make even the chore of getting through airport security almost delightful. I can't wait until it is everywhere.

    We talk about change all the time here on MNB ... and it is nice, sometimes, to see it happening all around, in small and big ways, doing things to make life easier and less complicated.

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

    KC's View:

    Published on: September 13, 2012

    by Kevin Coupe

    Two interesting and somewhat interrelated stories this morning that caught my attention, and that I think are worth yours...

    • The Washington Post this morning reports that numbers from the US Census Bureau suggest that continued shrinking of the American middle class.

    According to the story, "The 60 percent of households earning between roughly $20,000 and $101,000 collectively earned 46.6 of all income, a 1.5 percent drop. In 1990, they shared over 50 percent of income.

    "In contrast, the census data show, the top fifth rose 1.6 percent in 2011 after several years of decline during the recession. The biggest gains went to the top 5 percent, who earn more than $186,000; their share of income jumped almost 5 percent in a single year."

    Tim Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin at Madison, tells the Post that "the working class, whose pay tops out about $62,000, are bearing the brunt of the income squeeze. 'Their pay rate has gone down, the number of hours that everyone in the house works has gone down, their homes have lost value,' he said. 'These are the people really ravaged by the recession'."

    Which means, of course, that retailer and marketers that have traditionally catered to the middle class need to rethink that approach, and how they talk to a shrinking demographic segment.

    • The Federal Deposit Insurance Corporation (FDIC) yesterday came out with a study saying that 8.2 percent of US households - or almost 10 million - do not have a bank account, up from 7.7%, or about 9 million households, in 2009.

    The CNN story notes that these households - one-third of which report that they don;t have enough money to establish a banking relationship - increasingly turns "to alternative ways of getting cash -- like prepaid cards, payday loans, pawnshops and check-cashing services ... Minority, unemployed, young and lower-income households tend to be the least likely to have bank accounts. Compared to the 8.2% unbanked rate among all households, 21% of blacks are unbanked, as well as 22% of foreign-born non-citizens, nearly 23% of households with unemployed members and 28% of households earning less than $15,000."

    And, the story says, "Altogether, more than one in four U.S. households, or 28.3%, are either unbanked or underbanked."

    "Underbanked" is defined as people "who have bank accounts but who still use alternative ways of getting cash -- either because it's quicker to use an alternative or because they think bank accounts come with higher costs."

    Which certainly explains why Walmart decided it needed to create a way to allow these people without banking relationships to order online and pay for their purchases at the store.

    And it tells us something else about the continuing economic problems being felt by many Americans.

    Eye-Openers, both.
    KC's View:

    Published on: September 13, 2012

    Crain's New York Business reports that the Great Atlantic & Pacific Tea Co. (A&P) is selling its Food Emporium chain, saying in a memo that "the Food Emporium represents a unique urban footprint that requires a specific go-to-market strategy. Therefore, we've made the decision to market these 16 Manhattan stores to a variety of prospective buyers. The sale will enable parent company A&P to support the company's long-term strategic vision to be the No. 1 food and drug store in every neighborhood it serves."

    In addition to the 16 NYC stores, there is one Food Emporium in New Canaan, Connecticut, which is not part of the sale.

    The always reliable Burt Flickinger tells CNYB that ""the stores are not well managed," and that "customer counts have dropped dramatically over the last 10 years. CVS, for one, is walking all over Food Emporium, offering items such as yogurt, eggs, milk, soup, cereal, condiments at much lower prices." Flickinger estimates that most of the Food Emporium stores probably generate between $200,000 and $250,000 a week in sales.
    KC's View:
    Inevitable. A little sad. And, if I had to guess, just the beginning of an extended and painful process that will have A&P fading away until it finally disappears, just a memory for some and a Wikipedia footnote for others.

    Published on: September 13, 2012

    McDonald's said yesterday that it will begin posting calorie counts on all its menu boards in US stores, a move that comes before such postings are mandated by the new federal health care bill, and just a few years after it threatened legal action against New York City for making that same requirement.

    According to the New York Times, "The company also unveiled several menu additions aimed at making its offerings more healthful. They include an egg white McMuffin, a grilled chicken option for the Happy Meal and seasonal fruits and vegetables like blueberries and cucumbers ... McDonald’s has been experimenting this summer with placards listing 'Favorites Under 400,' the items on its menu that have 400 calories or fewer. This fall, some 750,000 of its employees will be able to participate in an e-learning program about nutrition, calories and the company’s menu to help them answer customers’ questions.

    "McDonald’s plans to introduce an app this year that will provide customers with information about calories in its products and help them build a customized meal plan."
    KC's View:
    This kind of transparency is going to be demanded by consumers, and so it seems silly for retailers like McDonald's to fight it ... regardless of whether such disclosure is required by federal regulations. Give me the information, give me options, and let me decide.

    Published on: September 13, 2012

    Several moves were announced by Toys R Us this week as it looks to give people a reason to shop there during the upcoming end-of-year holiday season. As opposed to, say, Walmart or Amazon.com.

    For one thing, the Chicago Tribune reports, it "plans to let holiday shoppers reserve what it considers 'hot toys'," a service that "lets shoppers reserve any of the 50 items on a yet-to-be announced list by making a 20 percent down-payment at its stores through Oct. 31. Shoppers will be notified by e-mail when their orders are ready and have until Dec. 16 to pick up the reserved items."

    The toy retailer also said this week that it plans to carry more exclusive lines from companies like Mattel and Lego, and will open 200 "pop-up" temporary stores, up from the 150 that it opened last year.

    Finally, Toys R Us said that it is launching its own exclusive tablet computer designed especially for children. According to Reuters, the "Tabeo" will sell for $149.95 and "will be loaded with child-friendly apps and integrated controls that allow parents to customize levels of Internet access for each family member."
    KC's View:
    Allowing people to reserve hot toys is probably a good idea for Toys R Us, which has had its problems over the years with supply and demand and delivering products in time for the holidays.

    There were reports last week about how Jerry Storch, chairman/CEO of Toys R Us, told a National Retail Federation (NRF) conference how "the demise of the big box retailer" is a vastly overstated premise, and that bricks-and-mortar stores will win the battle in the long run.

    We'll see. Because he may be underestimating the degree to which the next generation of shoppers has little or no allegiance to traditional shopping experiences. These are, by the way, the same people he's catering to with that Tabeo computer...

    It is not a matter of online retailing replacing the traditional store experience. It is understanding that the modern retailer has to offer both - and they have to be sophisticated, relevant, accessible ... and did I say relevant?

    For the moment, even in parsing what Toys R Us says are its innovations, you can see imitations of what Amazon already does. For example, at Toys R Us I'll be able to reserve any of 50 toys for the holidays even before they are in stock, so assure that I'll get one. But at Amazon, I can reserve pretty much anything they carry - that's millions of products, not 50 - before they actually come in, and know that, based on history, I have a better than even chance of getting it on time or even early.

    Maybe Storch is yearning for the good old days at Fort Courage.

    It's interesting. One MNB user wrote in yesterday about an Amazon story, saying:

    If Amazon is “able to cut as much as a day off its two-day shipping times”, that could mean I actually get my items the day before I order them!

    Just a fan and extremely pleased with the quick service I get now.


    I know what he means. Lately, it seems like even the stuff that is supposed to come in two days - I have Prime - comes in one.

    Amazon is establishing a clear reputation for under-promising and over-delivering. Which is not, I would argue, precisely what Toys R Us offers.

    Published on: September 13, 2012

    Today is the day in New York City, as the Board of Health there is scheduled to vote on the proposal by Mayor Michael Bloomberg that would "bar sales of sugar-heavy drinks in more than16-ounce cups or bottles in restaurants, movie theaters and some other settings," and hopefully have an impact on the city's obesity rates.

    The plan is expected to pass - the board is made up of Bloomberg appointees - though some reports suggest that the high degree of public interest - and criticism - could lead to either a delay or some modification.
    KC's View:

    Published on: September 13, 2012

    Bloomberg Business Week reports that the National Retail Federation (NRF) said yesterday that it is prepared to go to court to stop the proposed $7.25 billion settlement of the price fixing lawsuit brought by a number of retailers against MasterCard and Visa.

    According to the story, NRF says that "the proposed settlement of merchants’ price-fixing claims does nothing to prevent Visa and MasterCard from raising the so-called swipe fees in the future.

    "Proponents of the deal will be able to file papers formally seeking a judge’s approval ahead of an Oct. 19 deadline, lawyers for the plaintiffs said today in federal court in Brooklyn, New York."

    The settlement also has been opposed by the National Grocers Association (NGA), National Association of Convenience Stores (NACS), Walmart and Target, among others.
    KC's View:

    Published on: September 13, 2012

    The Columbus Dispatch reports that the Kroger Marketplace in Mansfield, Ohio, will begin selling jeans and shoes this fall as the company tests a new approach to one-stop shopping.

    “Our goal as a merchant, in addition to offering world-class food, is offering our consumer the best one-stop shopping experience that we can offer,” Mel Bomprezzi, vice president of merchandising for Kroger’s Columbus division, tells the Dispatch.

    The story goes on: "Kroger freed up space by eliminating its furniture department and dispersing it throughout the store. Then it looked to its Fred Meyer chain, found in the West and which already sells general merchandise, for guidance on what sold the best."
    KC's View:

    Published on: September 13, 2012

    Yesterday, in a brief about how Teamster-represented drivers and warehouse workers employed at the United Natural Foods Inc. (UNFI) distribution center in Auburn, Washington, have rejected the company's self-described "last, best and final" contract offer and has authorized a strike, we quoted the Sacramento Bee as reporting that "UNFI supplies organic and specialty foods to major supermarkets throughout the Puget Sound area, including Whole Foods, PCC, and the Metropolitan Market."

    In fact, Metropolitan Market does not receive any product from UNFI, is not affected by the dispute, and does not currently have UNFI as a vendor partner.
    KC's View:

    Published on: September 13, 2012

    ...will return.
    KC's View:

    Published on: September 13, 2012

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

    • The Associated Press reports that "federal health officials say ricotta cheese tainted with listeria bacteria is linked to 14 illnesses including at least one death. The imported Italian ricotta salata cheese distributed by Forever Cheese Inc. of New York is linked to illnesses in 11 states and the District of Columbia, according to the Centers for Disease Control and Prevention. Forever Cheese issued a recall of one lot — 800 wheels of ricotta salata, or roughly 4,800 pounds — on Monday.

    "The cheese was distributed to retail stores and restaurants in California, Colorado, the District of Columbia, Florida, Georgia, Illinois, Indiana, Massachusetts, Maryland, Maine, Montana, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Virginia and Washington between June 20 and Aug. 9."

    • In the UK, The Grocer reports that Starbucks plans to open 300 new stores over the next five years, hiring some 5,000 employees, and also bringing on 1,000 apprentices who will intern at the stores as a way of getting a taste of retail.

    “This scheme is a great way to attract new talent into our business to improve our employee retention and support our future growth, as well as upping the skill-set of the wider coffee industry,” said Starbucks UK & Ireland boss Kris Engskov.

    Loved the comment by London Mayor Boris Johnson, who called this "stonking news." Stonking? Now there's a word to add to my vocabulary....

    I looked it up, and "stonking" apparently means "freaking awesome." Well, not exactly "freaking," but you get the idea...

    Put it right up there next to "gobsmacked."

    KC's View: