business news in context, analysis with attitude

Published on: April 24, 2013

So I got an an email from Stew Leonard's the other day.

I get them a lot. After all, I've been shopping there almost weekly for about 29 years.

But this one was different. And very clever.

Apparently, comedian Jerry Seinfeld was spotted shopping at one of Stew's stores, and he left with a shopping cart full of food. (See picture at right.) Someone on the staff must have taken his picture, because it was front-and center of the email with the following message:

"Caption this and make me laugh!"

Essentially, Stew Leonard's offered a $200 gift certificate to whoever came up with the winning caption. Which I think is a very smart - and opportunistic, in the best sense of that word - thing to do.

I have no idea what the winning entry will be, and I'll report back when I get the inevitable follow-up email announcing the winner.

But here's my entry:

"Being the master of my domain never used to involve farm animals, baked goods and dairy products.  Not that there's anything wrong with that…"

Yada, yada, yada...

Published on: April 24, 2013

Interesting bit of analysis, courtesy of the folks at Wells Fargo, who conclude in a new report that "online grocery still nascent, but could be at the tipping point of acceleration: While online grocery is currently only a small piece of the U.S. grocery market ($13B or 2% of the total industry), we now believe acceleration is more likely from here given several developments: (1) proof the online grocery model is working in non-Manhattan markets by companies like Fresh Direct and Relay Foods, (2) our industry sources which suggest Amazon is preparing to launch its Amazon Fresh grocery delivery service outside of Seattle, and (3) the potential for Whole Foods to test grocery delivery in several markets. We also believe the propensity for consumers to shop for groceries online is increasing, given the proliferation of smart phones and broadband access, growth in online recipe sites/blogs, and evidence consumers are purchasing consumable items not previously deemed logical for online purchase (diapers, pet food, personal care)."

The report goes on to make the following points:

• "Grocery delivery is a challenging business given the intricacies of the model (delivering perishables and optimizing driver routes while still turning a profit) and the change in customer behavior required (upfront planning, inability to pick out your own produce). However, we believe online grocery delivery may eventually be a better model, allowing for one less trip to the store but also potentially fresher goods with a shorter supply chain, personalized recommendations based on past orders and current shopping behavior (you have tomatoes and mozzarella, do you need basil?), easy reordering of typical purchases (eggs, milk, etc.) and integration with online recipes allowing for easier shopping list creation."

• "Skeptics of the online grocery model suggest that it does not translate well outside of markets like Manhattan, where population density is high, consumers are more time-starved, and lack easy access to stores and cars to transport groceries. However, companies like Fresh Direct, which now derives 50% of sales from markets outside Manhattan, and Relay Foods, which operates in the mid-Atlantic, suggest that the online grocery model can work outside of super-urban locations."

• "Amazon is building out its fulfillment center network coincident with new state tax law deals in important states (CA, TX), and our industry sources suggest that it could be preparing to expand its Amazon Fresh grocery delivery service into California (SF and LA) and potentially NY and Philadelphia. Amazon has been fine tuning the model for six years in Seattle, and has the advantage of allowing customers to combine grocery orders with higher margin general merchandise to improve profitability. Whole Foods also appears to be preparing to test grocery delivery in several markets, which could drive basket size and frequency with existing customers and attract new customers not as close to a store. Basket sizes for online grocery are typically much larger, particularly with perishables, although fewer impulse buys could be a partial offset. We believe orders would be picked from stores initially until the business reaches critical mass, and Whole Foods should be able to leverage its significant distribution network, local sourcing, and superior quality to ramp more successfully and perhaps embed some of the costs (trucks, drivers, technology) in SG&A growth vs. a significant upfront investment."

Published on: April 24, 2013

Wrap your mind around this report from Reuters about how "apps are increasingly helping people monitor and control objects remotely on their mobile devices.

"From Internet-connected washing machines and smart refrigerators to bathroom scales, gadgets that connect to the Internet are on the rise in homes, and apps are the means to monitor and control them.

"By 2022, the average household with two teenage children will own roughly 50 Internet-connected devices, up from approximately 10 today, according to estimates by the Organisation for Economic Co-operation and Development. This trend has been dubbed the 'Internet of Things'."

However, there remain concerns that all this interconnectivity could lead to a loss of privacy, especially because "privacy laws may not yet account for the collection of personal data that these gadgets and apps may have access to, such as location."

Published on: April 24, 2013

The Grocery Manufacturers Association (GMA) is out with a new study, conducted in collaboration with Deloitte Consulting, that "contains five specific conclusions and recommendations for how food, beverage and consumer packaged goods (CPG) companies can convert emerging forms of 'big data' into useful analytics and insights to improve business results."

The five key conclusions are:

• "Few Have the Required Analytical Foundation in Place: Over the last decade, the majority of CPG industry firms have not progressed beyond localized analytics and are still challenged to capitalize on their 'small' existing data (internal and structured).  Conversely, a handful of CPG firms have improved their analytical maturity to become strong analytical companies and therefore have the required foundation to capitalize on new emerging sources of big data."

• "Rapid-Fire Pace of Innovation Requires Data & Analytics Competency: The rapid-fire pace of technological and digital innovation has the potential to define winners and losers in the CPG industry, and an integrated core competency around small data, big data and analytics is a requirement for the winners."

• "Industry is moving from linear change to exponential disruption: Until now, a CPG company’s competitive advantage did not depend on having strong analytical maturity; however, the industry’s preconceived notion of change is about to be disrupted by the exponential pace of innovation.  Navigating this landscape will require companies to harness data and efficiently convert it to insights."

• "Business Context Required – Integrated and Cross-Functional Business Planning & Execution: The 'Formula for Growth' is most impactful when applied in the context of cross-functional and integrated business planning and execution.  Whether small or big data, the goal is to consistently make better decisions to improve an organization’s planning and execution toward achieving top- and bottom-line growth objectives."

• "Cultural Shift - The Characteristics and Traits of the New Industry 'Winners': This new 'exponential' pace of innovation will require a culture of experimentation, trial and error, and other methods that enhance a company’s ability to remain agile, fluid and adaptable.  A strong versus weak data and analytical maturity is one of the key differentiators between a CPG company that effectively navigates this new era of innovation and one that falls victim to the exponential pace of change."

According to the press release, "the report is the culmination of more than 10 months of broad-based industry research."

Published on: April 24, 2013

I have no idea if this story is true, or some sort of put-on.

But it is too good not to report, especially since my opinion of fast food in general and McDonald's in particular has been oft-stated in this space.

There is a story in the New York Daily News about a Utah man, David Whipple, who appeared on the daytime TV show "The Doctors" to show them a McDonald's hamburger that he bought in - wait for it - 1999, and today looks pretty much the same as the day he bought it.

According to Whipple, he saved the sandwich because he wanted to demonstrate the impact of preservatives and enzymes on fast food, and then put it in the trunk of his car and forgot about it until recently, when he found it - no bad smell, no fungus, no mold. If it had been lukewarm, in fact, it would have been almost indistinguishable from newer burgers (we assume) sold at any McDonald's.

Published on: April 24, 2013

Reuters reports that AquaBounty Technologies, the company that has developed genetically engineered salmon "with the potential to grow to market size in half the time of conventional salmon," is predicting that it will get regulatory approval from the US Food and Drug Administration (FDA) before the end of the year.

"There have been no new legal issues, no new regulatory issues, no new environmental issues raised," says AquaBounty Technologies CEO Ronald Stotish.

According to the story, the FDA "is due to close a public comment period on Friday and will then likely take 30 to 60 days to review the comments, which include heavy opposition from consumer and environmental groups," which maintain that the salmon represents a "dangerous experiment."

Even if the FDA approves the sale of the GM salmon for human consumption, it is seen as likely that lawsuits could still prevent the product from making it to market anytime soon.

Published on: April 24, 2013

The New York Times reports that the US Senate voted 74-20 to begin debate about legislation that would allow states to force online retailers to collect sales taxes.

But agreeing to debate something is not the same as passing it. As the Times reports, "The bill, known as the Marketplace Fairness Act, is that rare piece of legislation that has turned Democrat against Democrat, Republican against Republican and business against business, while uniting states as different as New Hampshire, Montana and Oregon — which have no sales taxes — against virtually every other state."

Traditional bricks-and-mortar retailers support the legislation, while many online retailers - not to mention people who oppose new or all taxes - oppose it. But not Amazon, which is willing to trade the tax issue for the ability to operate distribution facilities in many states, which will enable it to ramp up its offering of same-day and next-day delivery.

The Times writes that "the bill would allow states to require all Internet sellers to collect sales taxes for the state and local governments of the buyers. State governments would be required to provide software free to Internet retailers to calculate sales taxes. Online retailers with out-of-state sales of less than $1 million a year would be exempt."

The Senate is expected to debate the bill and vote on it by the end of the week, though it remains to be seen how it will fare in the House of Representatives. President Barack Obama has said he will sign the bill if it makes it to his desk.

Published on: April 24, 2013

• Forbes has a story about how "Wal-Mart and Amazon are both such enormous companies that there isn’t even a fitting cliché to clumsily describe their battle for e-commerce supremacy. There isn’t a David in this fight. If Wal-Mart’s Goliath, Amazon is Godzilla."

Essentially, the story recaps a discussion that we've been having here on MNB for....more than three years. Here's how it lays out...

Walmart is much bigger than Amazon, but Amazon is much more successful on the web. They'll be roughly the same size by 2020. Walmart is trying to imitate Amazon in some areas, such as pickup lockers and same-day delivery. Amazon is building up its capabilities in the area of food, with a planned roll-out of its Amazon Fresh grocery service.

And the battle continues...

Published on: April 24, 2013

• Walmart and the Walmart Foundation announced this week that "over the last fiscal year they gave more than $1 billion in cash and in-kind contributions, making it the first time Walmart or any U.S. retailer has achieved that level of giving. The growth in global giving was largely due to increased in-kind donations in the U.S. to local food banks and families impacted by disasters."

Published on: April 24, 2013

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

• The Houston Chronicle reports that "Heinz may dominate the U.S. ketchup market, but H-E-B is betting Texas consumers will opt for a home-state favorite. The grocery chain announced Tuesday that it would begin selling ketchup and mustard branded Whataburger, which like H-E-B is headquartered in San Antonio.

"Starting this summer, the fancy and spicy ketchup varieties will be on H-E-B shelves in 20-ounce bottles and the original mustard in 16-ounce bottles."

Not being a Texan, I have no idea why this merits so much press coverage. But what the hell. I'd certainly be willing to try them.


• Published reports say that Suffolk County, New York, has passed two new laws - one that bans the sale and distribution of energy drinks to minors at county parks and beaches, and another that prohibits the mailing of coupons and free samples to minors.

The new laws are expected to be implemented next month, unless lawsuits are filed that seek to prevent them from taking effect. It seems likely that such a suit could be filed, since the American Beverage Association (ABA) has said it is disappointed in the decision because it unfairly targets safe and legal products.


MarketWatch reports that days before Amazon.com is due to report its first quarter sales and profits, CEO Jeff Bezos is trying to control expectations.

"We don’t celebrate a 10% increase in the stock price like we celebrate excellent customer experience," he wrote in his annual letter to shareholders earlier this month," the story notes.

This is a man who knows the right thing to say about customers. More retailers should be focused on Main Street rather than Wall Street.


CNN reports that while pushing kids to clean their plates or denying them certain foods are common - though diametrically opposed - practices for many parents, "researchers at the University of Minnesota found parents who restricted foods were more likely to have overweight or obese children. And while those who pressured children to eat all of their meals mostly had children of normal weight, it adversely affected the way those children ate as they grew older, according to the study published Monday in the journal Pediatrics."

The best approach, according to researchers? Family meals where a healthy and moderate attitude toward food is fostered, and children are encouraged to make smart choices without being forced into one pattern of behavior or another.

Really? I'm shocked.

Published on: April 24, 2013

Responding to pieces that Michael and I wrote this week about USA Today and the passing of its founder, Al Neuharth, MNB user Clay P. Dockery wrote:

After reading Michael's commentary along with Kevin’s “prequel," I have to offer a differing opinion on what made USA Today special.  That newspaper was a LIFELINE to me when it launched!  I had recently completed a move to an unfamiliar part of the country and as an avid fan of news in print, I quickly subscribed to the local paper.  I found the section about national news to be of value, but little else.  The connectivity that USA Today provided BC (before computers) was immeasurable for someone who craved a chance for a quick scan of “local news” that was a distance away.  It wasn’t the pictures, the weather map, or the color on a previously known black and white entity that counted; it was the synopsis of relevant news to me that I could not get any where else.

And MNB user Bryan Silbermann added:

Bravo Michael for focusing us time-starved, attention-diminished mortals on the long run view envisioned by Al Neuharth.  The quote from "The West Wing" – “There's been a time in the evolution of everything that works when it didn't work" – reminds me of the lovely line from the delightful movie The Best Exotic Marigold Hotel…. "Everything will be all right in the end... if it's not all right then it's not yet the end.”

Bonus points to Bryan for a movie reference.




Regarding Amazon's investment in TV pilots and its letting consumers decide which ones will get turned into series, one MNB user wrote:

Appreciate the value of Amazon's democratizing program evaluation - BUT -  if sheer numbers become the criteria, it seems we're on the path to more bottom-feeding 'Two and a Half Men' clones at the expense of shows like 'Arrested Development' that might take more than a pilot episode to get traction.  Maybe there's a difference between optimizing merchandise and optimizing art.

Maybe.

On the other hand, Garry Trudeau of "Doonesbury" fame is behind one of the pilots, and that's hardly bottom-feeding talent.

I haven't seen any of the pilots yet, but I'm going to make an attempt to do so when I can.




I cited the use of 3D printing technology the other day to build a house in Amsterdam, which prompted one MNB user to write:

If it took a reader to bring your attention to this -- I can't even begin to tell you how far behind you are on this subject. 3D has been exploding in applications for some time now. This is not news.

Maybe not. But using it to build a house seemed to be pretty innovative.




Regarding technological solutions to personalizing the hotel experience, MNB user Jeff Folloder wrote:

Not sure if I am looking forwarded to the technological advances of the hotelier world.  One tends to crave the *human* touch when one is away from home so as to make the experience less antiseptic.  True story:  I used to travel to the DC area near Dulles airport about every 6 weeks.  Always took the same flight that got me into Dulles in the late evening.  Always got to my room at the Reston Hyatt with not enough energy to go forage for food. Two times in a row I ordered a Caesar salad and matzo ball soup from room service.  Some enterprising manager noticed this and the third (and subsequent) time I showed up, room service met me as I was getting to my room.  Nice touch!  There has never been a hotel to match that performance in my experience.  And I have been in a *lot* of hotels.  So I will hope that the human touch stays engaged in this particular vertical...

From another reader:

I have to say, if I went to the front desk asking for advice and was handed an iPad, I’d likely be pretty P.O.‘ed.

Firstly, I’ve got my own smartphone and could do that myself.

Secondly, I’ve likely researched the area prior to arriving.

If I go to the staff seeking recommendations, it’s because they LIVE in the area; they are familiar with it and can tell me which restaurant is going to have the best food, the worst service, etc. Rather than taking a couple minutes to have a friendly conversation with the guest, rather than making that connection that the guest will remember and appreciate, handing them off to a piece of technology seems to me like giving them the cold shoulder. It says, under the guise of modernity, "I don't have time for you, do it yourself."

And MNB user Ken Pentheny chimed in:

I thought the concept was interesting also, as you said.  However, when they start using a robot names Rosie (from the Jetsons cartoon) to wait my table or clean my room, I am drawing the line.  I think we need to be looking at technology to help us accomplish tasks in our daily life, but not at the expense of human contact.  There is a lot to be said for talking to a real live person.

Agreed.

Published on: April 24, 2013

Variety reports this morning that "Walmart is about to give Superman an early boost at the box office, with the company becoming the first retailer to sell tickets to an advance screening of a studio film. It’s a deal that, if it takes off with consumers, could quickly become a new source of revenue for Hollywood’s majors while altering the way moviegoers are lured into the megaplex."

According to the story, Walmart "will offer nearly 1 million tickets to Warner Bros.’ 'Man of Steel' at 3,700 stores nationwide beginning May 18, at 8 a.m., for screenings scheduled June 13. Film officially bows Stateside on June 14. Advance tickets won’t become available to more traditional outlets until May 21 or 22, giving Walmart at three- to four-day advance on sales ... To sweeten the deal, the ticket price will include a free code to pre-order a Blu-ray combo pack or HD digital download of 'Man of Steel,' which will contain exclusive film content."

According to the story, the deal is seen as having the potential to build both early box office numbers for "Man of Steel," as well as for its eventual home video release. That's no small matter for Warner Bros., which is desperate to revitalize the Superman franchise and keep up with Marvel, which has been extremely successful with Iron-Man, Spider-Man, Captain America, and other franchise characters.

"And for Walmart," Variety writes, "the company is betting big on 'Man of Steel' as a title it hopes will lure consumers into its stores. In addition to selling tickets to early screenings, it will also start offering 'Man of Steel' merchandise, beginning April 28, that includes T-shirts, electronics, posters and other items on shelves and online at Walmart.com."

The strategy is seen as one that could be used again at Walmart for future films, as well as being employed at other major national retailers.