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    Published on: June 5, 2013

    The Wall Street Journal reports that "seventy percent of more than 3,000 online shoppers surveyed in February say they prefer to shop their favorite retailer online, according to a study commissioned by United Parcel Service ... Half the smartphone owners in the group and nearly 60% of the tablet owners use those devices to make purchases. Rather than fret about privacy, a majority (60% who had the technological capability), said they wanted to receive retail deals and promotions on the phones and tablets, based on their location or transaction history."

    Three other passages from the story worth noting:

    • "While customer satisfaction with online shopping generally was high - 83% overall - the lowest satisfaction scores had to do with factors related to shipping and delivery. Flexibility to choose a delivery date; to choose a delivery time; to reroute a package or to choose an environmentally friendly shipping option—ranked last in satisfaction when shoppers were asked to rate different aspects of the online shopping experience. Online shoppers want more choices, according to the survey."

    • "Online shopping continues to outpace growth in traditional retail, the survey confirms. Last year, e-commerce grew about 15% to $186 billion, seven times the growth rate of total U.S. retail spending, according to the study."

    • "Shoppers increasingly want what's called a 'seamless omnichannel experience,' meaning one in which retailers allow them to combine online and brick and mortar browsing, shopping, ordering and returning in whatever combo they would like. In fact, that is so important that 62% said they are more likely to choose to shop with a retailer that allows them to buy an item online and return it to a store ... Forty-four percent said the opposite: They are more likely to buy online if they can pick up at the store. While this saves them shipping costs, it is good for retailers; more than one-third (38%) buy extra items while in the store, according to the survey."

    Now, think about these numbers and scroll down a bit and read the story about Amazon Fresh's likely expansion. And scroll down further and read about Target Canada's plans for online.

    It all is an Eye-Opener.
    KC's View:

    Published on: June 5, 2013

    Los Angeles residents are likely to see Amazon Fresh trucks rolling on the freeways there, possibly as soon as this week, according to a Reuters story that quotes two unidentified people with knowledge of Amazon's plans.

    The San Francisco Bay Area is likely to see Amazon Fresh expanded there later this year, the story says.

    "If those new locations go well, the company may launch AmazonFresh in 20 other urban areas in 2014," Reuters writes, "including some outside the United States, said one of the people." Indeed, sources have told MNB that as many as 40 markets are on Amazon's list of likely expansion points for the online grocery sales and delivery service.

    The rollout of Amazon Fresh - which some believe could be renamed Amazon Local - is tied not just to the company figuring out the economics with the test it has been running for years in Seattle, but also its opening of distribution centers all around the country that can be easily reconfigured to handle fresh products that it will source from local vendors defined as being best in class. Those distribution centers have been possible by Amazon's decision to reverse its position on the collection of state income taxes; once it decided that being willing and able to collect those taxes might actually give it a competitive advantage over much smaller retailers for whom it would be a more complicated proposition, Amazon then was feed up to open distribution centers in virtually every major market around the country, which in turn gives it the ability to move to next-day or even, in some cases, same-day delivery.

    The Los Angeles Business Journal has a similar piece that reports on how Amazon is recruiting these vendors to be part of its expansion - getting Huntington Meats, from the Fairfax Farmers Market, to provide things like alligator andouille or wild boar sausage via Amazon Fresh.

    "For Huntington and a few other local retailers, the service could help boost sales. But for Amazon, it’s part of a plan to give customers fewer reasons to shop anywhere else by selling just about everything and offering quick delivery.

    "The company has been tight-lipped about AmazonFresh’s arrival in Los Angeles and executives did not return calls for comment. But Jim Cascone and Dan Vance, co-owners of Huntington Meats, said they expect a soft launch in Los Angeles on Wednesday or Thursday."

    This Amazon Fresh expansion has been rumored for some time. Now, it appears to be on the verge of happening.
    KC's View:
    The big key for Amazon is the research it has seen showing that when people buy groceries from Amazon Fresh, they tend to spend more money on all the other products that the online retailer offers. Which changes the economics of the situation, if Amazon doesn't have to make money by selling groceries.

    What traditional retailers need to worry about here, I think, is Amazon's willingness to try new ideas without much concern for so-called "legacy issues," much of which it does not have anyway. They're willing not just to challenge the traditional ways in which other retailers do business, but also the "traditional" ways that it has done business. Which can be awfully freeing if you are Amazon, and dangerous if you are the competition.

    Remember the line from Amazon's recent commercial (which seemed to double as a marketing manifesto):

    "What once was wildly impractical is now completely normal. And normal just begs to be messed with."

    Traditional retailers need to start messing around with their own normal ways of doing business. Because in this competitive climate, normal just doesn't cut it anymore.

    It isn't just Amazon. It is also Walmart, which is making a big push into this segment. (I would not be surprised to see an announcement about online grocery sales from Walmart at its upcoming shareholders meeting.) And Peapod. And FreshDirect. And the retailers that are using outside services such as MyWebGrocer (a longtime premium MNB sponsor) and Webstop (which powers MNB) to drive their digital businesses to varying degrees.

    If you're not in the game, you gotta either get into it, or figure out what your compelling value proposition is that will allow you not to compete online. And if you take the latter course, you sure better know how you are going to appeal to the digital natives who cannot remember a world before Amazon and iTunes.

    Published on: June 5, 2013

    The Minneapolis/St. Paul Business Journal reports that Supervalu's three CEOs during 2012 earned a combined $12.68 million, though it can be argued that "Supervalu had little to show" for such "lavish executive pay."

    Documents filed with the US Securities and Exchange Commission (SEC), the story says, show that Craig Herkert, who served as CEO until July 2012, "was paid $4.69 million last year, up 23 percent from the previous year. That included $375,000 in base pay and $1.39 million in stock and option awards. The bulk of his compensation — $2.75 million — was in the form of severance pay.

    "Wayne Sales, who replaced Herkert, was paid $5.28 million, which included a bonus of $1.63 million, stock awards of $2.74 million, and a base pay of $865,000. Sales also was to receive a 'golden parachute' payment of $12.8 million when he left the Eden Prairie-based company, according to an earlier SEC filing. Sales left in February.

    "Sam Duncan, the current Supervalu (NYSE: SVU) CEO, was paid $2.71 million in fiscal 2012. That included a $500,000 bonus and $2.1 million in option awards."
    KC's View:
    Listen, I think that business leaders deserve to be paid well, that their compensation should be tied to their stature, their achievements, and their performance.

    But I also think that it is hard for business leaders to lead when they're preaching efficiency and cost cutting, eliminating jobs, freezing pay and benefits for people on the front lines, but then create a climate in which people in the executive suite seem to be immune from such considerations. (Hell, there probably are some folks at Supervalu - and other companies - who would argue that the real problem is that the SEC requires such information to be made public.)

    At major corporations, captains don't seem to go down with the ship. They always seem to have the nicest lifeboats, and they are allowed to get on them first.

    It just strikes me as a little hard to lead a troubled company under such circumstances.

    Published on: June 5, 2013

    The Wall Street Journal reports this morning that Target Canada CEO Tony Fisher told a retail conference in Toronto this week that his company plans to make a major push into online shopping, with a "truly Canadian" website, but he has not established a timeline for the venture.

    “We are taking the time to understand the digital landscape in Canada and what will resonate well with our guests," Fisher said.

    The story notes that "Canadians spent more hours online per month last year and watched more online videos than most anyone else, while also outpacing the world in terms of monthly pages and visits per web user, according to research firm comScore ... And although digital transactions are still a small slice of overall sales, they are growing exponentially,” he said.

    "That’s certainly been true in Canada. Last year, Canadians spent 22.3 billion Canadian dollars ($21.6 billion) to shop online, a nearly 10% increase from the year before, according to comScore."
    KC's View:
    When CEOs say they haven't established a timeline for an initiative, I always think that what they really mean is that they are not willing to announce a timeline, and that a launch, if not just around the corner, simply is not the far away.

    Published on: June 5, 2013

    • The City Wire reports that Walmart has been "granted a temporary restraining order against the United Food and Commercial Workers International Union and its affiliate OUR Walmart by a Benton County Circuit Court Judge," who ruled that while people demonstrating against Walmart's labor practices can demonstrate outside company headquarters, they cannot do anything that would disrupt the conduct of business in stores.

    Walmart is sensitive to the fact that it is about to hold its annual shareholders meeting, and union activists are expected to try to draw attention to their positions.

    Activists say that this is just Walmart's latests attempt to silence their voices.
    KC's View:

    Published on: June 5, 2013

    Ad Week reports that Whole Foods sees its opening of a new store in downtown Detroit today "as part of its repositioning as a go-to grocery store for everyday staples for shoppers on any budget.

    "The chain will launch pilot stores in Detroit, New Orleans and on Chicago's South Side in 2013 and 2014 that feature fewer staffers, lower prices, and more frozen and prewrapped food, said Whole Foods co-CEO John Mackey. 'For every penny we cut off the price, we reach more people who can afford to shop with us,' he said."

    The story goes on to say that "while getting more affordable, the company denied that its existing stores deserve their pricey reputation. 'The premise that the healthy food we sell at our stores is expensive or elitist is false,' Mackey said. 'If you know how to cook and if you buy whole grains, beans and produce, you don't need to spend lots of money,' he said.

    "Whole Foods' price margins, however, show the retailer’s perception is probably warranted. In the last three years, the company reported gross margins (the amount a retailer earns from the sale of its products) of 34 percent to 36 percent, according to financial analysis site Seeking Alpha. (In comparison, Walmart’s and Target’s gross margins are about 24 percent to 29 percent.)"
    KC's View:
    I don't know about you, but every time some Whole Foods exec spouts the "we're not really expensive" line, they lose just a bit of credibility in my mind. They'd be better off saying "we don't have to be expensive ... let us teach you how to shop and cook and eat." And, in fact, that's probably the real message, but they never quite put it that way.

    I have a Whole Foods that is basically equidistant from my house and MNB Global Headquarters, and I love going there ... but I can't afford to buy a lot there. I make some value decisions about things I like, things that are worth a bit more money. But I've never walked out saying to myself, "What a deal!"

    Maybe the new, smaller, urban stores will be different. But they don;t just have to change their pricing. They have to change perceptions, and attitudes about eating. They've got to change the world.

    And, in fact, that's probably the real goal...

    Published on: June 5, 2013

    • The LaCrosse Tribune reports that "Roundy's Supermarkets Inc. has paid $43,000 to the state of Wisconsin to settle allegations it overcharged customers." According to the story, the fine "was levied after inspections at 43 stores in October. Roundy's owns Pick `n Save, Copps Food Center and Mega Marts grocery stores ... Roundy's did not admit violating any state laws."

    ABC News reports that "the state of California is suing Whole Foods markets, Trader Joe's and other stores for allegedly selling lead-tainted ginger and plum candies ... The lawsuit accuses the retailers of failing to alert customers to the lead which is a violation of Proposition 65. The law requires businesses to warn consumers about harmful toxins in food, toys, jewelry and other products."
    KC's View:

    Published on: June 5, 2013

    John B. Lightfoot, Jr., a longtime food industry trade journalist who helped launch the Retail Insights video franchise and then became a consultant to USAID, spending a great deal of time trying to improve the food distribution systems of the Soviet Union and other developing countries, has passed away. He was 81.
    KC's View:
    This one hit be a little hard when I got the news late last night in an email from Meg, one of John's children. I knew John for a long time - I'd had some small interactions with him when I was briefly a writer at Drug Store News in the early eighties, and then, in the mid-eighties, I worked with him a lot when I became an editor/reporter/producer for Retail Insights, which by that time had been acquired by Maclean-Hunter, the Canadian conglomerate.

    To be honest, John and I did not always see eye to eye - about politics, about journalism, about writing, or even about my hairline. (He once suggested, entirely seriously, that I should cut my hair so that it would appear that my hairline was receding, which he reasoned would make me look older and more credible on-camera.) I wouldn't call him a mentor ... but that's because I resisted being mentored by someone with whom I disagreed so often.

    (It is a little disconcerting to realize that when I met John all those years ago, and I viewed him as being old, he was almost a decade younger than I am now.)

    The one thing I always knew about John was that he wanted the best for me and the best for the program that he had created, and that, essentially, was being turned over to me. He wanted me to live up to my potential (even if we did not always agree on what that meant), and he wanted me to do more than just report on the food business, but to think about it and challenge common assumptions. While I was not comfortable with that role 30 years ago, I knew from emails I'd received from him in recent years that he took considerable pleasure from the fact that I now make a living thinking and opining.

    And, by the way, let's not forget that when John, along with several other folks, decided to leave Lebhar-Friedman and start up a multimedia trade journalism property - it moved from being a slide show to video in fairly short order, though in the beginning, if I recall correctly, they had to buy companies VCRs to play the tapes, because such equipment was still uncommon - it was a gutsy and prescient thing to do. In its own way, it foresaw the technological revolution that has changed how we all do business and communicate.

    When I got the email from Meg last night, I was touched by the fact that she said John, even as his health declined, always wanted to be kept up to date about information, and tried to adapt to new technologies as they became available ... and that he kept reading MorningNewsBeat and took pride in its development and success.

    I'm glad he did. Sometimes it takes the passing of a person such as John Lightfoot to make one realize how much impact he's had on your life. It makes me feel bad that I'm not sure I ever told him that.

    Then again, I suspect he knew. I suspect that every time I wrote a commentary, he must have smiled a bit, knowing that it took me a couple of decades to catch up to where he'd wanted me to be all those years ago.

    John's passing leaves his wife of 57 years, four children and nine grandchildren to mourn him. The food industry should mourn him, too. Because while he could be a colossal pain in the neck sometimes, he also was the kind of guy who changed things. And as I think of him now, I can see him as if it were yesterday - sitting in his office, banging away on a keyboard, dressed in a blue or gray suit, a button down shirt, and thick-solded brown shoes, puffing on an ever-present cigarette while dreaming up some new project that would send him off to some country I'd never even heard of.

    Yes, John could be a pain, especially to those of us who did not measure up to his expectations. But he was a good man, with a good heart and a keen mind. I hope he knows, all these years later, that I feel that way.

    Published on: June 5, 2013

    ... will return.
    KC's View:

    Published on: June 5, 2013

    ESPN's Outside The Lines is reporting that Major League Baseball is preparing to suspend as many as 20 players - including Alex Rodriguez and Ryan Braun - based on information being provided by Anthony Bosch, the owner of Miami's Biogenesis clinic, who is believed to have provided the players with performance-enhancing drugs.

    Bosch is said to be willing to name names in exchange for MLB dropping its lawsuit against him, as well as a number of other considerations; he is expected to begin meeting with MLB officials within a week, with suspensions - which could run as much as 100 games - possible by the end of the month.
    KC's View:
    Good. MLB needs to send an unambiguous message that PEDs will not be tolerated, and that players found to be using them will punished severely and, if found using them again, banned from the game.