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    Published on: December 6, 2012

    This commentary is available as both text and video; enjoy both or either. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

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

    I wanted to share with you an email I got the other day. It reads:

    "I love most of everything on MNB but your slavish devotion to Amazon is starting to gall me as a small business owner.

    "Are you enjoying Amazon’s 'long-term goal of world domination'?  In the last year, Amazon and Google Shopping have taken total control of the “top of the fold” section of Google search results.  This has resulted for many on-line retailers of a loss in traffic approaching 50% regardless of how good our organic search results are. 

    "Added to this is the fact that many retailers use Amazon as a way to violate MAP pricing rules by using the Amazon umbrella to undercut MAP pricing guidelines set by manufacturers.  Not to mention that 'Show-rooming' has evolved as a technique to allow consumers and their smartphones to use brick and mortar retailers as a way to view products and then buy them on-line from Amazon.  Finally, Amazon with their enormous shipping volume can ship same or next-day anywhere in the country for prices unobtainable by the average retailer.

    "Small retailers are dropping like flies and the internet is becoming one homogenous platform.  Not necessarily good ultimately for the consumer."

    I get your point. I don't think I have a "slavish devotion to Amazon," but I certainly understand why you might get that impression. I also would reject the suggestion that I might be "enjoying" its march to world domination ... when I use that phrase, my tongue actually is firmly in cheek.

    I do think the following. You are right about pretty much everything you say about Amazon. In a lot of ways, Amazon is carving out for itself some enormous competitive advantages which are going to put a lot of other retailers at a competitive disadvantage.

    Not to be tough, or glib or insensitive ... but I have a one word response to people who get upset about this shifting retail reality.


    Amazon isn't doing all these things because Jeff Bezos sold his soul to the devil, like Robert Johnson. (Though when you think about it...)

    Amazon is able to do these things because it figured something out about how people's shopping habits were going to change before everybody else did, or at least better than everybody else did.

    If Amazon is able to price better and faster than everybody else ... or take advantage of show-rooming better than everyone else ... or ship cheaper than everybody else ... this doesn't make Amazon evil. Just really, really good at its job.

    When I write about what Amazon does - about Amazon Fresh or Subscribe and Save or delivering on what it promises faster than anyone else, or using shopper information more extensively than anyone else - I have two agendas in mind.

    One, enormous professional interest. I think that any retailer in virtually any industry that isn;t thinking about how Amazon could disrupt his or her business is making an enormous mistake. Amazon-style disruptions are going to happen to your business, regardless of why you are or what you do. It may start with Amazon, or it may start with someone else. But it is going to happen. My goal with MNB is to spotlight what Amazon is doing - the same way I spotlight what a lot of retailers do - so we can all learn from it.

    Second, I look at Amazon from the shopper's point of view. And yes ... I find that Amazon, better than many other retailers, is good at satisfying my shopping needs in a way that delivers value and convenience. Doesn't mean that I don't go to stores, but time and again, Amazon manages to play the trump card. And so I shop there. Often, but not always.

    When I write about this for MNB, it is with the belief that a lot of people feel the same way I do. I'm not sure every retailer believes that, though, so I figure it is at least part of my job to hammer it home ... so we all can learn from it.

    Does this make me slavishly devoted to Amazon? I don't think so. What I probably am slavishly devoted to is retailing that is aspirational, that delivers a solid value, that seems relevant to the way I live my life.

    I think that's what most people want. Retailers have to deliver it.

    Those that don't will find that someone else will. And that ought to scare the crap out of them.

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

    KC's View:

    Published on: December 6, 2012

    by Kevin Coupe

    Okay, this is a little weird...but for that reason, I love it.

    Reuters reports that there are so many lobster's in the waters off the coast of Maine that they are beginning to eat each other. (Actually, the big ones are eating the small ones. But you get the picture.)

    According to the story, "Maine’s lobster catch rose to a record 104 million pounds (45 million kilograms) last year, compared with 23 million pounds in 1981. The 2012 catch is expected to shatter that record as overfishing and other factors have led to the collapse of populations of cod, halibut and other groundfish that feed on lobsters.

    "Warming waters in the Gulf of Maine due to climate change have also bolstered the population even as the same phenomenon has led to more disease and lower populations in Long Island Sound and southern New England."

    My questions are: When lobsters eat lobsters, do they need to wear a bib? Do they like to cook them in water, or do they like to mix in a little white wine?

    (All I can think about here is the great lobster scenes from Annie Hall, which you can see here.)
    KC's View:

    Published on: December 6, 2012

    The Chicago Sun Times reports that Cerberus Capital Management plans to make a bid for Supervalu's Albertsons and Save-A-Lot chains, a shift from its original plan to acquire all of Supervalu and sell some of it off in pieces.

    There had been reports that Supervalu's poor financial status was making it difficult to raise the money necessary to buy all of Supervalu.
    KC's View:
    I'd have to guess that Supervalu would be happy to take pretty much any reasonable deal that will give it a little cash, which in turn will give it some running room.

    But not a lot.

    Published on: December 6, 2012

    In the UK, the Guardian has a great piece about Tesco's plans to bail out of the US, closing or selling its troubled Fresh & Easy operations in the western US, noting that Tesco is just the latest British retailer to run into trouble on US shores. Other familiar names that found the US to be an inhospitable retail environment: Marks & Spencer, and Sainsbury.

    There have been, the story notes, "a litany of ill-fated forays dogged by poor preparation, heavy competition, financial difficulties and sheer arrogance. Some retailers failed because they tried to run things from the UK, were suckered into taking on expensive stores that could never be profitable, or failed to consider the different tastes, seasons or even clothes sizes of US shoppers. Others underestimated the scale of investment needed to take on such a large territory."

    The story goes on:

    "Tesco cannot be accused of poor preparation. The company spent two years researching the US market, even sending in a crack team of executives to investigate the contents of Americans' fridges. It gained some knowledge of the market through a deal to provide IT for the online arm of the US retail chain Safeway.

    "Despite those efforts, Fresh & Easy clearly managed to get things wrong. Initial plans to open hundreds of stores within a short time-frame served by dedicated distribution centre and food "kitchen" were put on hold when it became clear the retail concept needed tweaking.

    "Andrew Kasoulis, an analyst at Credit Suisse, said Tesco needed 300 to 400 stores to become profitable given the costs of its dedicated support infrastructure. But getting to that size would have taken years, and vast additional investment, while Tesco was forced to tackle early errors including limited ranges with too few brands familiar to US shoppers, mistakes on health and beauty and bakery, and an attempt to take ready meals to a US public not used to such a concept.

    "All of those problems combined to give Fresh & Easy an unclear image that swung between upmarket and low-cost discounter, according to experts. Meanwhile competition in the region stepped up in reaction to Tesco's arrival. Walmart hired David Wild, a former Tesco executive, to help it counter the British invasion. Aldi, the German discounter, announced plans to open stores in California, Fresh & Easy's heartland."
    KC's View:
    One can imagine that there will be plenty of postmortems done in coming months. But I have to say that I am fascinated by the phenomenon of a CEO who builds a company to new heights, is celebrated as some sort of genius, is given all sorts of awards and plaudits, and then leaves the company ... and we find out within a few years that there are a whole bunch of problems with the company and structure he created.

    What does Terry Leahy think about what is happening to Tesco? Is it anything like what Jeff Noddle thinks about what has happened to Supervalu? (Boy, wouldn't it be fun to have those two guys engaged in a panel discussion...?)

    Published on: December 6, 2012

    • In Massachusetts, the Northborough Patch reports that the Northborough Wegmans has announced on its Facebook page that it would no longer have a store-specific Facebook page.

    According to the story, once the store opened, its Facebook page traffic just got too much to handle.

    The Patch writes:

    "We have a Blog and a company Twitter handle," Jo Natale, director of media relations, told Patch. "Both are very active and comments are monitored and responded to by our consumer affairs department. We do not, however, have a company Facebook page, and at least for now, there aren’t plans for one."

    Natale explained that a number of stores started Facebook pages on its own, and have autonomy to do so. The Northborough store had started a page several months before opening.

    "Of course, it was easy to manage before the store opened," said Natale. "But, they quickly discovered, once the store opened and got very, very busy, that it wasn’t so easy to stay on top of comments or to find the time to post. In a retail operation like ours, there isn’t anyone sitting at a PC or checking a mobile device throughout the day. It’s a fast-paced business that requires our people to be on the floor serving customers. Our other stores with Facebook pages (Pittsford, NY and Harrisburg, PA) have been open much longer and have figured out a way to manage their pages, which is great.  It doesn’t mean that all 81 of our stores can or should do the same."

    KC's View:
    I don't quite get this, but I take Jo Natale at her word ... you'd think that Facebook would be a terrific forum for Wegmans to engage with shoppers, but I guess those shoppers will have to be satisfied with setting up and being involved with fan sites.

    Published on: December 6, 2012

    Starbucks said yesterday that it plans to expand by 3,000 stores just in the Americas over the next five years, with half of those new units in the United States, for a growth rate of about 13 percent.

    In addition, the company said that it expects to have 20,000 stores across the globe by 2014; it currently has about 18,000.

    Much of the new growth will come from China, Starbucks said, which will become the company's second biggest market. (Canada is now.) Starbucks said it will open 1,500 stores in 70 Chinese cities by 2016.

    According to the USA Today story, "Cliff Burrows, who heads Starbucks' domestic business, said the problem wasn't that Starbucks was over-saturated, but that the company hadn't been careful about its store openings. In the years leading up to the downturn, the company was opening well more than 1,000 stores a year. That led to cafés in locations where signs or traffic might not be optimal, he said.

    "Burrows said Starbucks has gotten more sophisticated and noted that the cafés opened in recent years are among the company's best performers."
    KC's View:
    Maybe this makes sense. On the other hand, maybe Starbucks will once again over-expand and get itself into the position where the infrastructure is so big that it becomes increasingly difficult to deliver on its "third place" value proposition, and becomes a just factory slinging coffee...

    Which makes me wonder, if this expansion doesn't work out, who will Howard Schultz blame then?

    Published on: December 6, 2012

    Reuters reports that Coca-Cola "is taking an ownership stake in the maker of the Core Power protein drink as the world's largest soft drink company increases its bet on milk-based beverages ... In addition to Core Power, Coke said it wanted to create 'an innovative portfolio of brands and products that feature the value-added nutrition of dairy'."
    KC's View:

    Published on: December 6, 2012

    • Dave Brubeck, who was one of the best known jazz musicians in America, and usually described as the the first jazz superstar of the LP era, died yesterday, one day short of his 92nd birthday.
    KC's View:

    Published on: December 6, 2012

    Got a number of emails about what appears to be the likely departure of Tesco from the US with the sale of closure of its Fresh & Easy stores. One reader wrote:

    Fresh and Easy never quite found its mark in the US, partly because their offerings were rarely in sync with their locations and the surrounding demographics.  Many  of their locations were easily acquired as they simply just 'rehabbed' existing closed store in shopping centers.  But these locations proved to be less than optimal for accessing the fresh-minded, on the go, shopper that their stores were designed to appeal to.

    Other than Fresh Market or Sprouts, I don't see too many retailers chasing after this business, but it will be more than interesting to see how the assets are evaluated and how much curb appeal any or all of these stores have to a potential acquirer.

    From another reader:

    Any chance that Amazon would want the stores to run their AmazonFresh markets from?  A perfect chance to provide pick up locations for a much larger range of goods than is being provided in this format currently, and with the endorsement of Amazon, it could really take off....

    I cannot imagine that Amazon would want that kind of bricks-and-mortar presence.

    MNB user Richard Sokolnicki wrote:

    "The plans came after two years of intensive research that involved Tesco sending senior executives from the UK to live with Californian families, assess the way they shopped and ate..."

    Sheesh! Did they send them to live with transplanted Brits? Every aspect of the Fresh & Easy concept was DOA - except the fact that it involves small stores. (I may have said that once or twice in the past.)

    I quoted yesterday from a study that said that "a majority surveyed again reported getting an emotional lift from postal mail, with 62% of Americans saying they enjoy checking their mailbox."

    I commented:

    Really? Because at least 62 percent of the time, the stuff I get out of the mailbox goes right into the trash can or recycling bin.

    One MNB user responded:

    Not sure about the other 62%, but for some completely bizarre reason to me snail mail seems more personal, even when I know it is bulk. Or maybe it is the thrill of the surprise. You know you are going to have e-mails, you never know if you are going to have anything in the mailbox. 90% of what I get in the mailbox goes straight to the recycle bin and I still get a small kick out of it. 90% of my e-mails also go straight to the trash icon, but no little thrill, just a desire to get off someone’s mailing list. Doesn’t make sense, just the way it goes.

    MNB user Steve Sullivan wrote:

    I have a few years on you Kevin.  So, picture yourself, with the kids all grown up and with kids of their own (in our case, 10 of those wondrous beings called grandchildren).  They live half a coast away, in some foreign land called New Jersey.  You open the mailbox and here is a big manila envelope, addressed with an uneven scrawl.  You open it to find drawings, letters, poems.  And signed, “ I love you, Poppy”.  “I Love you Nan.”  “We miss you, Poopy and Nan” (yep, that’s what it said).  Those 600 miles between us just became so small – and  SO much larger at the same time.  Pictures on Facebook, writings in emails just don’t FEEL the same.  And I’ve yet to find a way to hang them on the refrigerator.  I guess I’m an old (fill in the blank here),  but I really do get a lift from my mail. 

    Yes, there is a lot of stuff that doesn’t even make it into the house with a quick detour to the recycle bin (I wish AARP would give up on me for a few more years), but I hope the USPS will be around for a few more years.  I’ll be out by the mailbox waiting for that package from the great-grandchildren.

    Regarding the new $450 steel, limited edition Starbucks card that has just gone on sales, MNB user Joe Davis wrote:

    Regarding the Starbucks steel card, can’t say I understand this at all either.  The Starbucks mobile-pay app is wonderful and incredibly easy to use.  I can’t imagine paying a $50 premium for the “privilege” of having a metal plate installed on my person.  The whole thing seems a little haughty – and for that reason alone, it may do incredibly well.

    Got the following email regarding a recent story about a declining birth rate in the US:

    Kevin I have always enjoyed MNB and find it a good read to keep up on the current state of our industry.  Often our industry focus on short term fixes to what ills us such as more Features and Displays, Sharper pricing, New Products, and ignore the simple fact that the customer base is shrinking.  Your commentary on the US birth rate decline today sparked me to write.

    This is a serious issue that many have chosen to ignore or plan for.  I saw a presentation by Doug Anderson (AC Nielsen) in Nov 2009 at the Mid Winter GMA conference in which he presented the economic impact of declining birth rates.  The premise is that any Economy is driven by births than any other factor.  The impending economic bomb that will certainly come to every nation when their birth rates drop is compelling evidence that this will (is) happen(ing) here, is already happening elsewhere and will happen in virtually every country in the world where their birth rates drop below the "replacement level".  Without the replacements to consume what we make is the simple fact that drives this prognostication.  Couple that with the extended longevity of people around the globe and you have huge pressures on social programs and the labor force availability to do the jobs needed.

    We had a story the other day about how some restaurants and stores in the Boston area continue to sell mislabeled fish, which led one MNB user to write:

    This is no different than filling up your car with 93 Octane, willing to pay 20-cents more per gallon than 87 Octane, and finding out later that the gas station put the cheaper 87 blend in higher priced 93 storage tank.  Without any regulation, there would be plenty of gas stations taking advantage of the consumer.  This is no different, and that is exactly what is happening, some intentional and other not. The seafood industry is very complex with many species, countries of origin, farm raised/wild caught, sizing/packing specs, and is hard to understand for even the veterans. The consumers don’t even realize when they have been taken advantage of.  Regulation in this industry is looooong overdue.

    Agreed. Especially since some people have gone on the record as saying that the controversy is "silly."

    We had a story the other day about how more dads are buying toys for their daughters, which means that more so-called girls' toys are being designed to appeal to their dads, which means that more girls toys are being developed that will help them grow their math and science skills.

    Which led MNB user Jessica Duffy to write:

    I would look forward to ANY change in the offerings of girls toys. For girls there is just an endless stream of pink plastic crap that is packaged to grab attention, but which has very little play value. There is no room for imagination or improvisation…just a stupid hamster that runs up and down ramps making squeaking noises. Or those Bratz dolls! Honestly if I wanted my daughter to grow up to go into the oldest profession, then I would buy her a Bratz doll. Ridiculous! Amazing toys are marketed to boys including construction and building and science and sports – good quality, long-lasting toys, that have good open-ended play value. Every year I am at a loss trying to xmas shop for my daughter – I just can’t choke up the money for the crap offered girls. My son’s gifts accumulate easily. I torture myself to shop for my daughter.

    Again, I love emails from readers that detail their own shopping experiences:

    I wanted to share a "dinosaur retailer" story … My aunt and uncle enjoy visiting the Isle casino in Bettendorf, Iowa, so my sister and I wanted to get them a gift card from the casino for Christmas. I visited the casino's website but couldn’t find anything on purchasing gift cards online, except that they are available in the casino's gift shop. I emailed the casino about all this through the "contact us" link on Saturday; as of today (three days later) I hadn't gotten a response. So this morning I called. I first was sent to a main response center. Once I was transferred, this is how the conversation went:

    Woman at casino: Front desk.

    Me: Hi there. I was wondering if there's any way to purchase a gift card over the phone or through the mail.

    Woman: It's $5.75.

    Me: Excuse me?

    Woman: The gift cards are sold in denominations of $25 and there's a $5.75 surcharge for each money order.

    Me: Money order?

    Woman: Yes, you have to send in the amount of the gift card plus $5.75 via money order.

    Me: I can't just order one over the phone with a credit card?

    Woman: No. Money order only. Or you can come into our gift shop.

    Me: Ma'am, I live in Chicago.

    Woman: Then you have to send us a money order.

    I thanked her and hung up. How many things were wrong with this conversation and failed transaction? I understand that they wouldn't take personal checks for fraud reasons, but a credit card is verified immediately. Plus, why would I go out of my way to purchase a money order in this day and age when I'm perfectly solvent? This was the casino's only opportunity to get money from me, ever (I'm not a gambler), and they in no way made it easy or convenient for me to give it to them. So now my aunt and uncle are going to get sweaters instead of a gift card to a place they really like.

    Still another Supervalu-related email, in this case related to new layoffs:

    I have to wonder, if Craig Herkert hadn’t walked away with a few million dollars for being fired and Wayne Sales hadn’t accepted his million plus sign-on and stay bonuses, how Supervalu could have possibly just reduced the 401(k) match for all employees instead of eliminating it altogether for the majority of them. This is the kind of thing that makes it difficult for the rank and file to feel that upper management is taking as big a hit as they are expected to take. What’s so frustrating is that this is the norm in this country and why so many people are suffering financially.
    KC's View:

    Published on: December 6, 2012

    A reminder, if I may...

    I will be in Chicago tomorrow, attending the evening performance of "A Klingon Christmas Carol," in which my eldest son has a role, at the Raven Theater. (You can check it out here .)

    Since I'm going to be in Chicago, I thought it might be nice to have one of our little MNB get-togethers before the show. So I'll be at the bar at Bin 36, located at 339 North Dearborn Street, if anyone would like to join me for a glass of wine (not Klingon bloodwine, alas), tomorrow from 4:30 pm to 6 pm. (I'll have to leave at 6 if I'm going to make the 7:30 pm curtain for "A Klingon Christmas Carol.")

    We can raise our glasses and say, "Heghlu'meH QaQ jajvam!"
    KC's View: