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    Published on: November 6, 2013

    by Kevin Coupe

    This has nothing to do with retailing. Or even business.

    Except, maybe, that it suggests that consumers shouldn't be underestimated, and that change should not be resisted.

    It was just about five months ago in New York City that a controversial bike rental program went into effect. Similar to programs that exist in other cities both in the US and abroad, the Citi Bike initiative (sponsored by Citibank) allows people to rent a bike from racks placed all over the city and then return them to any Citi Bike rack elsewhere in the city.

    Drivers complained because they were worried about the impact on traffic, and the likelihood that injuries and even deaths would result. They also complained that the bike racks were taking up valuable parking spaces, and would be underutilized by residents and tourists. This was a change that was not necessary, not timely, and not in synch with how New Yorkers live, they said.

    Wrong.

    According to National Public Radio, "the city's initial goal for Citi Bike's first year was to attain 60,000 annual members. According to Citi Bike data, the system had over 93,000 members as of November 1."

    Perhaps even more importantly, those members have ridden almost 10 million miles in the last five months … and there has not been one related fatality. Not one.

    The lesson, I think, is that change, even when it seems untimely and inconvenient, should be embraced, not resisted. Because the future is here, and all the naysayers look simply they were clinging to the past.

    Which, in business, can be a significant, even fatal, miscalculation.

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

    Published on: November 6, 2013

    A Washington State ballot initiative that would have mandated the labeling of GMOs in food products there appears to be failing, though Politico notes that a great many votes remain uncounted, making it impossible to make a definitive call one way or the other.

    Anti-GMO labeling votes accounted for 54.8 percent of the tally, compared to 45.1 percent of voters who supported the initiative.

    According to Politico, "The delay in the final count is due to the fact that Washington is a mail-in ballot state, and it will count any ballots postmarked by Nov. 5 — even if those ballots arrive at the end of the week. As a result, the tally on election night often only reflects about 60 percent of the votes that ultimately will be received, according to Brian Zylstra, a spokesman for Washington’s Office of the Secretary of State. If that holds true in this election, with 997,566 ballots counted on election night, another 665,044 could be in the mail."

    The battle over the GMO labeling initiative has been an extraordinarily expensive one, with $30 million spent in total - $22 million by anti-labeling forces that included the food and biotech industries, and close to $8 million by proponents of labeling laws.
    KC's View:
    While the final vote count may not be in, I won't be hugely surprised if the ballot initiative fails. That's usually what happens when a ton of money gets thrown at an issue, which is exactly what happened here. Anti-labeling forces, supported by corporate dollars that simply could not afford to let this pass, got together and proved that in electoral politics, money often wins. And until lawsuit threats forced the Grocery Manufacturers Association (GMA) to reveal where the money was coming from, these corporate interests preferred to operate in the shadows, because that's where the anti-transparency forces thrive.

    I continue to believe, however, that these folks are on the wrong side of history. The calls for greater transparency will continue, and I think that defeats like these will only serve to energize the people who believe that labeling is information, not condemnation, and that information is better for consumers, not worse.

    For the moment, I am more concerned about the continued impact of big money on political discourse than I am about GMO transparency. It is a bigger, much more insidious problem.

    Published on: November 6, 2013

    by Randy Fields, Bruce Christiansen and Sage Horner

    The opposite of visibility is the word hidden, which is synonymous with all sorts of potentially troubling terms like concealed, veiled and covert. But the most harmful synonym for those of us trying to optimize the retail supply chain is unknown. The prospect of not knowing where product is, where it’s going, what’s selling and what’s not is one of the things that keep retail and supplier executives up at night.

    Unknown orders from DSD vendors, receipts mistakenly entered, ledgers improperly balanced and dozens of other actions that cause store, DC and manufacturing facilities to run at far from optimal levels. And all due to a lack of visibility.

    For retailers, visibility means having a series of processes that will reduce inventory, improve operating capital, reduce out-of-stock, increase sales and support the customer experience. For suppliers, visibility means efficiently running operations and collaborating with retailers, which combined increases sales. For both retailers and suppliers, visibility is the key to collaboration. Visibility to the supply chain, visibility to scan data, and visibility to consumer behavior. This visibility results directly in category expertise, improved promotional management, accounting efficiency.

    The late Dr. Don Bowersox of Michigan State and Nick LaHowchic, a former supply chain executive at The Limited Brands, wrote in their book Start Pulling Your Chain: "If information was shared fluidly between participating firms in a channel, then a great deal of "anticipation" would be replaced with facts. In a collaborative environment, it would not be necessary to forecast what others are planning to do or what they are planning to buy - you would be able to see it."
    In their assessment, and ours, visibility isn't just about making incremental gains in performance and service, although these are often the first benefits achieved. Visibility needs to change the entire supply chain paradigm in many ways, some of which may not be initially understood.
    Park City Group provides robust, collaborative supply chain, merchandising and store level solutions for both retailers and suppliers that increase sales, improve operational efficiencies, such as shelf replenishment and merchandising, optimize inventory and reduce out-of-stocks. Our innovative solutions provide trading partners a common platform on which they can capture, manage, analyze and share critical data, bringing greater visibility throughout the supply chain, and giving them the power to make better and more informed decisions.

    Next time we’ll show how visibility enhances the shopping experience and creates sales lift for both retailers and suppliers by way of a few case studies. In the meantime, we’re interested in your feedback, so feel free to contact us today. We’ll listen to your challenges and then help you develop and execute a plan to Sell More, Stock Less and See Everything: Email us at sales@parkcitygroup.com, or call (435) 645-2205.
    KC's View:

    Published on: November 6, 2013

    Reuters reports that beef processor Cargill has decided to begin labeling of finely textured beef - commonly and disparagingly referred to as "pink slime" - that is in its ground beef products.

    According to the story, "Cargill's finely textured beef is a processed meat product made from chunks of beef, including trimmings, and exposed to citric acid to kill E. coli and other dangerous contaminants. The product, which Cargill has made since 1993, is used to produce higher-volume, less fatty ground beef."

    However, a controversy about the unlabeled presence of finely textured beef/pink slime in ground beef emerged last year when consumer advocates suggested that the lack of labels demonstrated a deplorable lack of transparency … though the specific controversy concerned a similar product made by Beef Products Inc.

    Cargill says it made the decision to provide the labels - which the story says already are being used by some of Cargill's customers, including Hy-Vee - was made after it surveyed consumers about what they knew and did not know about beef processing.
    KC's View:
    Part of the problem was the content of lean finely textured beef, but the bigger problem was that it was not being disclosed.

    Kudos to Cargill for recognizing that disclosure and transparency, in the long run, are always the best strategic decision.

    Published on: November 6, 2013

    The Wall Street Journal reports that "all natural" is losing its popularity as a claim made by food manufacturers, as companies deal with lawsuits that challenge the legitimacy of the claim - which, as it happens, means very little.

    The story notes that "food labeled 'natural' raked in more than $40 billion in U.S. retail sales over the past 12 months. That is second only to food claiming to be low in fat, according to Nielsen. A survey last year by Mintel, another market research company, found 51% of Americans seek out 'all natural' when food shopping.

    "The problem is, 'natural' has no clear meaning." The US Food and Drug Administration (FDA) has no specific definition, though it sort of vaguely says that it means that nothing synthetic has been added. The story says that "only 22.1% of food products and 34% of beverage products launched in the U.S. during the first half of 2013 claimed to be 'natural,' down from 30.4% and 45.5%, respectively, in 2009 according to Datamonitor. Though many Americans still want natural products, Datamonitor says only 47% view the claims as trustworthy."

    Details can be found here.
    KC's View:
    This is interesting because I was talking to someone just the other day who told me that he'd seen research suggesting that "local" was losing some steam, and was being supplanted by "natural," which seemed curious to me since "natural" is such an amorphous word when applied to food.

    I have to admit that in my opinion, while "local" seems very important, the most critical quality for any food is, quite simply, "tastes great." Life is too short to eat stuff that doesn't taste good, and the older I get, the more I find that mediocre meals seem like an opportunity lost.

    Published on: November 6, 2013

    MyPrivateBrand writes that "in a surprise move that demonstrates an increasing emphasis on Private Brands, Walmart, the world’s largest retailer, has begun what appears to be a test of a new extreme valuebasic brand. Price First is featured in a 2-page flyer introducing the brand and it’s stark blue and yellow neo-generic packaging with the headline, 'Choose our lowest-priced brand for all your grocery staples. Look for it in your store today.' The products appear to be moving from existing unbranded or control brand SKUs … if successful, the new brand will dramatically expand the Walmart Private Brand portfolio. With its addition, Walmart will create a very traditional three-tier private label architecture similar to the strategy implemented by most mainstream grocers in the 1980’s."

    The story says that the new line appears to be in beta rollout in at least eight markets around the country.

    If you want to see what Walmart is testing, click here.
    KC's View:
    Walmart clearly is making a calculated bet here, hoping to make a distinct differentiation between its Great Value and Price First labels, and believing that there is a customer out there who wants a stripped down generic label. Maybe that's because Walmart no longer is perceived as being the price leader it used to be, and so it had to do something dramatic.

    It's true that there is a difference between low prices and value. And it is true that there is room out there for "retro" as a marketing approach.

    But these labels, which look they fell off a truck that has been lost in the Twilight Zone for three or four decades, strike me as being potentially confusing to shoppers, in part because they reek of a desperation that Walmart has lost some of its its competitive advantage.

    Published on: November 6, 2013

    There is a terrific piece of analysis on Salon.com by Eugene Wei, a former Amazon employee, in which he looks at the company's approach to profit and loss. The pioneering e-tailer, which has continued to grow sales without showing any profit growth, has come in for some criticism because of an approach that some think unsustainable. These criticisms were crystallized earlier this year by Matthew Yglesias of Slate, who wrote that "Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers."

    Wei takes issue with that:

    "To me," he writes, "a profitless business model is one in which it costs you $2 to make a glass of lemonade but you have to sell it for $1 a glass at your lemonade stand. But if you sell a glass of lemonade for $2 and it only costs you $1 to make it, and you decide business is so great you’re going to build a lemonade stand on every street corner in the world so you can eventually afford to move humanity into outer space or buy a newspaper in your spare time, and that requires you to invest all your profits in buying up some lemon fields and timber to set up lemonade franchises on every street corner, that sounds like a many things to me, but it doesn’t sound like a charitable organization."

    It is a fascinating analysis, and you can read it here.
    KC's View:

    Published on: November 6, 2013

    MarketWatch reports that Adobe is out with its 2013 Online Shopping Forecast, which predicts that "record growth for online sales on Thanksgiving with $1.1 billion and Black Friday with $1.6 billion, increases of 21 and 17 percent, respectively. Consumers are also expected to spend more than $2.27 billion online this Cyber Monday, up 15 percent year-over-year (YoY). With only 27 days between Thanksgiving and Christmas, the data also shows that the late start could cost retailers $1.5 billion in potential sales."

    The Forecast also predicts that "mobile optimized retailers will transact more than 20 percent of their sales via smartphones and tablets, a 47 percent increase YoY"; that while "only two percent of purchases will come directly from social media sites including Facebook, YouTube, Pinterest and Twitter," more than a third of consumers will use social media as a touchpoint before making their purchases; and that "showrooming" will become standard operating procedure for consumers, with 35 percent of 18-34 year olds saying they "already leverage mobile devices to compare prices while in stores, well above the 22 percent average."
    KC's View:

    Published on: November 6, 2013

    CNN reports that Sears Holdings-owned Kmart is getting blowback from consumers annoyed by the retailer's decision to stay open for 41 straight hours beginning at 6 am on Thanksgiving morning, a decision that the company said it made to provide customers with maximum flexibility and opportunity to shop. However, at least some customers say that Kmart is showing a level of heartlessness, greed and even "moral bankruptcy" by adopting a policy that prevents employees from having Thanksgiving dinner with their families.

    The outrage is being expressed on social media sites such as Facebook, with some customers threatening a boycott because of the move.

    Kmart has responded by saying that it will use seasonal employees and volunteers wherever possible, and that the move will allow workers to make extra money.

    According to CNN, "Kmart has opened at 6 a.m. on Thanksgiving for the past three years. Last year, however, stores closed for a few hours at 4 p.m. to let shoppers and employees get to their Thanksgiving dinners … Many stores are opening on Thanksgiving Day, but are waiting until the evening to throw open their doors to deal hunters. Toys R Us is by far the earliest among those, announcing Tuesday that it would open at 5 p.m., three hours earlier than last year. Macy's, Kohl's, J.C. Penney and Sears will let customers in at 8 p.m."
    KC's View:
    I totally get why some consumers are ticked off by this. I agree that some things ought to be sacrosanct, and I'm bothered by all the Thanksgiving store openings. That said, let's be fair - Amazon and every other e-tailer will be open all day on Thanksgiving, and bricks-and-mortar retailers are under pressure to be open, or be closed (permanently). So I may be disturbed, but I understand.

    Published on: November 6, 2013

    MNB took note last week of a Forrester analysis of how marketers and e-business executives evaluate digital marketing opportunities, concluding that these executives believe that Facebook "creates less business value than any other digital marketing opportunity." This despite the fact that last year alone, Facebook generated ad revenues in excess of $4 billion.

    In an open letter to Facebook CEO Mark Zuckerberg, Nate Elliott, vice president and principal analyst at Forrester, wrote that he believes that Facebook "focuses too little on the thing marketers want most: driving genuine engagement between companies and their customers," and "isn’t good enough at the pure advertising business onto which you’ve shifted your focus."

    Well, VentureBeat.com is out with an analysis of the analysis … and it is scathing. An excerpt:

    "All data is stupid data if it’s the wrong data … In putting this report together, Forrester looked at the wrong data — the cardinal error when generating conclusions since they’re almost guaranteed to be wrong if you don’t properly understand what you’re analyzing.

    "Forrester’s report is anecdotal, generated by going to 'executives' and asking them what they think. That may very well prove that Facebook has a C-suite image problem — and that very well be a valid issue — but it says very little at all about the success or failure of advertising on Facebook. In a court of law, it might be classified as 'hearsay.'

    "That’s something that native digital advertisers know in their DNA."

    You can read the whole critique here.
    KC's View:
    What's really interesting to me, beyond the analysis of the analysis, are the comments posted on the message board below the story, in which the opinion seems divided. I'm not sure what to make of it … except that it does not seem like a stretch to suggest that sometimes c-level execs don't understand marketing expenses in a granular way. Sometimes things are what they are, but not always.

    Published on: November 6, 2013


    • MNB has learned that Jax Markets, the two-store independent supermarket company that was founded by Bill MacAloney in 1970, has been sold to Gonzalez Northgate Markets, the 36-store, Anaheim-based chain.


    Reuters reports that Starbucks said this morning that it is committing to hire at least 10,000 US military veterans over the next five years.

    The coffee company also said that "five new and existing U.S. Starbucks cafes on or near military bases will share a portion of each sale with non-profit organizations that help veterans re-enter the workforce."

    CEO Howard Schultz said that the initiative was not just about hiring baristas, but that the company "is seeking individuals with experience in everything from leading teams to building and managing complex, global supply chains."

    Former US Secretary of Defense Robert Gates, who served in both the Bush and Obama administrations and who now is on the Starbucks board, said that veterans offer international experience and foreign language skills: "They bring an understanding of other cultures and they're accustomed to working with diverse and international partners."


    Bloomberg reports that spurred on by a made-in-the-USA trend, Apple Inc. will open a new plant in Mesa, Arizona, that will hire 2,000 employees and run entirely on renewable energy.

    The story notes that "after years of outsourcing much of its manufacturing to suppliers in China such as Foxconn Technology Group, Apple Chief Executive Officer Tim Cook has made adding jobs in the U.S. a priority. The Cupertino, California-based company next month will release a new Mac Pro that is being assembled in the U.S."
    KC's View:

    Published on: November 6, 2013

    • Charlie Trotter, the renowned and enormously influential Chicago chef and cookbook author, was found dead yesterday at his home on the city's North Side. He was 54, and no cause of death has yet been determined. Trotter closed his eponymous restaurant in 2012, saying he needed a break and wanted to go back to school, perhaps to study philosophy or political theory.

    “If I don’t go for something while I’m in the prime of my life and I have the means to do it, well, why wouldn’t I?” he said at the time.
    KC's View:

    Published on: November 6, 2013

    The other day, MNB took note of a CNet.com report that Tesco is rolling out "eyeball-scanning tech" that will "scan your eyes in its petrol stations. Then while you queue for the till, the screen will show adverts it hopes will appeal to you based on your age and gender … As well as choosing ads based on your age and gender, the screens take into account the time and date, too. So they could show ads for Red Bull and other energy drinks in the morning, then switch to women's magazines if they detect a queue of females. Expect seasonal promotions aplenty, as well as ad-funded branded spots for big events like the World Cup."

    One MNB user responded:

    As a movie expert, you will probably remember the specifics, but I think it was Tom Cruise’ “Minority Report” that showcased this individualized advertising delivery concept. You have to wonder if this will become common-place in another 10-20 years…

    From another reader:

    I don't mind so much the idea of literally 'eyeballing' me as a consumer.  I've often thought they would miss the mark by a long shot by guessing what might interest me based on my age and gender.  Thus, what I really fear most is that my cherished notion that I am unique as a shopper will be shattered and they'll nail my drives and desires precisely . . . without even 'knowing' me.

    I do think there is a danger is projecting too much based on age and gender and even ethnicity. Perfect example: given a choice, I'd much rather shop at Sur la Table than Home Depot, and Mrs. Content Guy is precisely the opposite. But that's probably not the conclusion that a computer application would reach.

    In so many ways, effective marketing is what happens when consumers are appealed to based on their differences, not their similarities. Which is the challenge to every retailer … and why technology is not the answer to such challenges. It's what you do with it that counts.




    On the subject of ordering fresh produce online, MNB reader Jeff Gartner wrote:

    While I understand the skepticism expressed for fresh produce delivered to one's home, it really comes down to how much you trust the quality of the produce . After all, this is rather similar to those who already subscribe to CSA programs with local farmers. You're trusting the farmer not only with the quality, but also to choose the selection and variety for you.

    BTW, I truly enjoy going to our local neighborhood store (a great store) and looking to see what's fresh and available, along with the social benefits from running into friends and neighbors there. So while I'm not a good prospect now for delivery, I understand why others are.


    I think you are exactly right about the trust issue. E-commerce ramps up the demands on retailers to be expert, reliable and credible. To think otherwise is to be delusional.




    Following up on Monday's "Sports Desk" report about the NYC Marathon winners, one MNB user wrote:

    Not to slight Marcel Hug, Ernst Van Dyke, Kurt Fearnley, Masazumi Soejima or Kota Hokinoue - the top five finishers in the men's wheelchair division, who all finished the marathon within 2 seconds of each other - Tatyana McFadden, with her victory in the women's wheelchair race, completed a sweep of winning the Boston, London, Chicago and New York marathons in a single year.

    Wow. I didn't realize that.

    Thanks for sharing.
    KC's View: