business news in context, analysis with attitude

Published on: June 17, 2014

by Michael Sansolo

Many years ago, a somewhat savvy cab driver picking me up from a technology trade show asked me a question that still lingers. In everything that I saw while I was at the show, what was the “killer app”?

In other words, what did you see that is changing the world?

I remember it because the next day I went looking for that killer app and found it. It wasn’t the new Microsoft applications gaining prominence at that time. Rather it was the sudden explosion of wheelie suitcases that dominated the luggage areas.

The real killer apps are those that get used.

I recalled that question this week reading the interesting discussion here on MNB about Uber’s car service. Virtually all of those comments manage to be correct, even while the readers disagreed. Uber is rewriting the rules of car services with advanced technology and an attempt to build a better customer experience.

Yet it’s also unfair that Uber gets a built in advantage of not having the legacy costs and governmental regulations that hit existing cabs. Of course, as we’ve all noticed, change is usually unfair.

Nonetheless it’s easy to argue that the killer app of the show was Uber and I think that tells us something. The technology is never the killer app, it’s the way people apply it.

Two days after last week's Food Marketing Institute (FMI) show, I saw what might yet be another killer app, while attending a performance of the National Orchestral Institute. It’s an app that might have implications far beyond classical music - maybe even for trade shows - because of how it seeks to transform experiences.

I attend orchestral concerts like this for two reasons: first, my son was performing in the group, and second, I always feel young at these concerts. (If you want to see an industry with future problems go to the symphony and consider the preponderance of senior citizens in the audience.)

The classical music industry is aware and terrified of this and is constantly looking for ways to reach out to new listeners, with programs featuring more modern music.

At the NOI concert a glimpse of the future was on display. The Imaging Research Center of the University of Maryland Baltimore County was offering a new way to enjoy the concert. IRC was giving a select few audience members iPads loaded with a program that would provide updates and insights throughout the performance. In much the way that pop-up video changes the movie experience, IRC is looking to transform a classical concert.

Of course, it’s going to mean some changes starting with how to illuminate the theater so that the devices aren’t a huge annoyance. But in much the way that opera companies have learned to improve their experience by displaying English translations above the screen, this new app could help new concert goers overcome intimidation at classic concerts by explaining what’s going on, when to applaud and more.

That would be a killer app. Just as guidance in a supermarket to help me make better choices for economics, nutrition or just taste is a killer app. And even at a trade show, an app that helps me follow speeches, find interesting exhibit happenings or even monitor the cab line would be a step further, even beyond what FMI tried this year.

You could even say it would be uber.


Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .

Published on: June 17, 2014

by Kevin Coupe

At the risk of igniting the GMO debate here all over again…

In the UK, the Telegraph has a story about how Australian researchers have developed a genetically modified banana that is "enriched with alpha and beta carotene which the body converts to vitamin A," and that will soon begin being tested to see if they can " lift vitamin A levels in humans." The Telegraph writes that "the Queensland University of Technology (QUT) project, backed by the Bill and Melinda Gates Foundation, hopes to see conclusive results by year end."

According to the story, the goal is to grow the bananas in countries like Uganda, Rwanda, parts of the Democratic Republic of Congo, Kenya and Tanzania - places where, though bananas are a major crop, they tend to be varieties with "low levels of micro-nutrients, particularly pro-vitamin A and iron."

Project leader Professor James Dale tells the paper that "good science can make a massive difference here by enriching staple crops such as Ugandan bananas with pro-vitamin A and providing poor and subsistence-farming populations with nutritionally rewarding food."

I'm sure that someone will have reasons not to do this … and, not being a scientist, I'm hardly the ideal person to judge the project's suitability.

But on the face of it, this seems like a pretty good idea, providing both nutritional and economic benefits to an area of the world that could use them.

As I say, though, I'm sure there will be a debate … and it'll be an Eye-Opener.

Published on: June 17, 2014

The New York Times reports that Instacart, a two-year old e-commerce company that specializes in providing personal shopping services at a variety of retailers, has gotten an infusion of capital to the tune of $44 million.

According to the story, the investment was "led by Andreessen Horowitz. Three venture capital firms that previously invested in the company, Sequoia Capital, Khosla Ventures and Canaan Partners, participated in the latest round … Jeff Jordan, a partner at Andreessen Horowitz, said he was attracted to Instacart because it was a 'people marketplace.' He said the company had an advantage over other grocery delivery services, including FreshDirect, because it did not rely on warehouses, trucks or other capital-intensive infrastructure."

Instacart currently serves consumers in 10 cities, shopping at retailers ranging from Whole Foods to Trader Joe's, charging consumers delivery fees or annual subscription fees for its services.

In a blog posting yesterday, Jordan wrote: “We’re making a bet that Instacart’s partnerships with brick-and-mortar grocery stores will be the winning play in grocery delivery to the home, with the ability to fend off competition from e-commerce companies that build out their own infrastructure.”

Published on: June 17, 2014

Six major retailers - Walmart, Costco, Walgreen, FreshDirect, CVS and drugstore.com - have reached an agreement with the New York State Attorney General that will have them providing unit price information on their websites and mobile applications.

Bloomberg reports that Walmart and Costco have nine months to comply with the terms of the agreement, while the others have until next March.

NY State Attorney General Eric T. Schneiderman tells Bloomberg that while 19 states require unit pricing in stores, "display of per-unit prices online has been rare."

According to the story, "New York’s unit pricing statute requires large retail stores to clearly display the price per unit of measurement for most types of food, cleaning and paper products, toiletries, pet food and over-the-counter medications. In written agreements, the companies said they would follow requirements of the New York law in disclosures online."

Amazon reportedly refused to participate in the agreement, and the NY Attorney General has not yet said whether legal action could be taken against it.

Published on: June 17, 2014

The Los Angeles Times has a story about how "Los Angeles has been thronged by online grocery delivery services that promise fresh food at your door within hours at the click of your keyboard," but it notes that "it turns out not all online grocers are the same; they're as varied as brick-and-mortar markets and offer distinct shopping experiences and products. Looking for a foodie site with pretty pictures and artisan goods? Superstore with more than half a million items and fast delivery? Convenience mart with the option of organic vegetables?"

In fact, all these exist in LA … and more. "In the last year, companies both large and indie have emerged in the L.A. market: AmazonFresh, Instacart, Good Eggs, Deliveer, Kale Cart and SPUD, in addition to some already established services (Yummy.com, for example). Not to mention grocery store chains such as Vons.com. Wal-Mart and Google are testing the same waters."

Published on: June 17, 2014

The Chicago Tribune reports that "hackers have stolen data on more than 600,000 Domino's Pizza Inc customers in Belgium and France," and are asking for a $40,000 ransom. If they don't get it, they say they will publish the customer names, delivery addresses, phone numbers, email addresses and passwords.

Published on: June 17, 2014

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

• The Wall Street Journal reports that Safeway has reached a preliminary settlement of a shareholder lawsuit that could have derailed its acquisition by Cerberus Capital Management for $9.4 billion. The suit was related to Safeway's ownership interest in Casa Ley, a Mexico-based retailer, which the company now will sell.

The Cerberus acquisition of Safeway, which will put it under the same ownership umbrella as Albertsons, is expected to close within three months.

I have to be honest here. The details of this tentative settlement are a lot more complicated than I've described them … but I'm not going to offer any more detail because, quite frankly, I don't understand any of this stuff … this kind of financial stuff, like references to "contingent value rights," is way beyond my pay grade. But if you're interested, check them out here.


• Advertising Age reports that Chipotle's integrated media campaign called "The Scarecrow," which highlighted the company's efforts to sustainably source its products and avoid those made by "Big Food," won the PR Grand Prix award at Cannes.

The campaign was created by Creative Artists Agency with partner agency Edelman.


• The Los Angeles Times reports that Hillshire Brands has formally agreed to be acquired by Tyson Foods for almost $8.6 billion in cash and assumed debt. The deal includes the dropping of Hillshire's own bid to acquire Pinnacle Foods and the cessation of negotiations with Pilgrim's Pride, which also wanted to acquire Hillshire.

Published on: June 17, 2014

Tony Gwynn, the San Diego Padre superstar who was known as Mr. Padre, has passed away after a long battle with cancer. He was 54.

Gwynn, a Hall of Famer, retired in 2001 with eight National League batting titles and a career batting average of .338 and 3,141 career hits. The San Diego Union-Tribune writes that "he was a two-sport athlete who came to San Diego State as an 18-year-old basketball player and never left town, returning to his alma mater upon retirement from the big leagues to coach the Aztecs baseball team at Tony Gwynn Stadium."

The story goes on to say that Gwynn "endeared himself to San Diegans with his jovial nature, the inexplicable twang in his high-pitched voice and those quick bursts of child-like laughter … The east entry of Petco Park - built on the success of the 1998 team that Gwynn helped put into a second World Series - is on Tony Gwynn Drive. Out in the grassy Park at the Park is a huge statue, the only one honoring a Padres player, and it’s of Gwynn taking his classic swing."

Published on: June 17, 2014

Regarding the expected Amazon announcement that it will begin selling a smartphone that will make it even easier for people to buy stuff from it, creating a path of least resistance, one MNB user wrote:

I know this is a huge extrapolation from what you were reporting and commenting on but in the back of my mind came the thought of the corporate business in Rollerball;  a business “which dealt with nominally-peer corporations in controlling access to all transport, luxury, housing, communication, and food on a global basis”.  With Amazon continuing to explore and move into other business venues as it extends its grasp (read: influence) it wouldn’t be a surprise to see that Jeff Bezos has become Mr. Bartholomew after all and that eventually all commerce of any type would be “managed” for the good of the people by a single entity.

While I'm not sure see any resemblance between Jeff Bezos and John Houseman, it is an interesting idea … and you get extra credit for the movie reference. (If people haven't seen the original Rollerball, with James Caan, they should … it is in some ways an eerily prescient movie.)

On the same subject, from another reader:

“Think different”: It certainly benefits us in the MNB community. Bezos already has a tablet device for as low as $99 vs. Apple’s $599.  He has shown a propensity to build direct consumer connections.  What better device to offer than a smartphone?  Verizon & AT&T have $250B annual revenues with 80% market duopoly with 200M US customers.  Some estimates indicate Amazon touches 100M US customers/year and $74B worldwide revenue.  I don’t expect Amazon to convert 100M people to an Amazon smartphone but I do expect the pricing pressure will change the mobile landscape.  How soon before Walmart “Straight Talk” phones get more attention?  

“Think different – Part 2”: I am particularly curious about AT&T’s new home internet service venture.  They are using their data fiber backbone with a local community wireless service to deliver wireless  25 Mbps internet into the home.  That’s equivalent to Comcast cable and way beyond phone line DSL service (2 Mbps).  AT&T with sat-TV, wireless phones, and soon fast local internet … could be a huge game changer.  Netflix becomes a big winner.

When all the hardware and networks gel into one big homogenous offering, I think Google and Facebook come out on top.  Perhaps Netflix #3 if Facebook or YouTube don’t preempt them.  Apple should buy Netflix.

This assumes that anti-trust doesn’t get in the way, of course.

And to think much of this was made possible by Michael Powell, who put in place the portability of phone numbers back in the Bush administration.




On another topic, from MNB reader Bernie Ellis:

The announcement of Chris Michael's retirement is a real loss to all independents in the Northeast. As the former President of AWI under Chris, I can attest to his passion for the independent and knowledge of the business. When he recruited me eight years ago, it was obvious that he wanted the Independents to be aware of what the Chains were doing and for the Independents to incorporate into their strategy the best of the chains with their own core strengths. He was never wanted the Membership to be playing catch-up. He embraced Card Marketing, Websites for stores, Electronic communication to consumers and more before many chains. And he executed on the vision.

 His focus was always on being competitive on price while building the business on the unique strengths of each Independent. I learned the Coop business under his tutelage and hope the knowledge and passion he has for the Independent carries on after he leaves.




Responding to our story about Ben & Jerry's eliminating GMOs from their ice cream, one reader offered:

Sure, Ben & Jerry’s did the right thing with GMO’s.  In fact, the phrase “there’s no wrong way to do the right thing” comes to mind.
That being said, the protest doesn’t surprise me.

Seems that if a non-GMO philosophy really were “in line with the brand,” as you wrote, they would have gone non-GMO earlier and not worked against the ballot initiative. 

Unilever and other mammoth multinationals need to know that when they buy the “granola-crunchy” niche brands, that they own it all, including the customers and the values.
 
The one wrong way to do the right thing?  Having to be reminded by your customers of what’s right and wrong.

MNB reader Steven Ritchey wrote:

I understand the non-GMO crowd wanting to boycott the GMA members, but, use your brain.  If a GMA member is bucking the trend and reformulating to not use GMO  products, support them.  I find the entire GMO debate to be pretty complex.  Some GMO  product may actually be good for us, in increasing yield, making plants be disease and drought resistant.  However, I want my foods properly labeled and I don’t like the idea of a giant seed producer forcing its seeds on anyone.

I mentioned yesterday that the fanatics who can only see one side of the GMO issue, wanting to boycott Ben & Jerry's - which is trying to do the right thing - because of its ownership by Unilever, make me a little nuts.

Which prompted one reader to write:

After watching the international news this morning I am grateful that our fanatics are merely obsessed with GMO's.

I doubt anyone here is going to execute me because I am not on their side when it comes to GMO's.

One can hope.




Finally, following up on some of last week's coverage of the Food Marketing Institute / United Fresh shows in Chicago, one MNB reader wrote:

As an exhibitor (for many years) as well as a previous retailer attendee, I’d be curious to get honest feedback from your readership community on the effectiveness of the FMI show.  To spark the conversation, I would list the following comments:

FMI is trying really hard to make this show a success….BUT:

Attendance by retailers was dismal.  The aisles were never busy because the people were not there.

The floor was littered with booth spaces that had gone unsold.

Most major CPG companies have pulled out of the show years ago because of the lack of attendees.

Most exhibitors would tell you privately that they feel like they need to be there, but that the show is a bust.  Many have moved to minimal presentations in 10x10 booths.

Understand that no one faults FMI’s desire to make this show a success, but if retailers don’t see the value in this event and thus don’t attend, what’s the purpose?  We all know that trade shows have been on the decline for many years, with the exception of the NRF Tech show in January, which seems to still be holding its audience.  I think that resurrecting the FMI show as an annual event (again) is like trying to resurrect the local newspaper by offering morning and evening delivery (for people that remember those days).  Times have changed, whether they are acknowledged or not.

The MNB floor is open. Comments, as always, are welcome.