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    Published on: June 25, 2014

    by Kate McMahon

    My family was lamenting that we have not yet shopped at our local Saturday Farmers Market this year when an intriguing post showed up on my Facebook news feed from Fresh Nation Metro North. It promised to deliver fresh produce from the same purveyors directly to my door.

    It sounded to good to be true, or else prohibitively expensive. It turns out I was wrong on both counts.

    Fresh Nation is a new player in the burgeoning “farm-to-table” movement that finds Americans demanding more locally-sourced fruits, vegetables, meats, cheeses and other artisanal products. The company ran a pilot program in Connecticut last summer, and six weeks ago launched the business in Los Angeles and expanded in Fairfield County, CT and Westchester County, NY.

    Unlike competitors that ship pre-selected and packed boxes of local produce from farms to subscribers, Fresh Nation is essentially a crowd-sourced food delivery service connecting the Farmers Market to the consumer.

    “We can deliver the Farmers Market to your home, five days a week,” Fresh Nation founder Tony Lee told me. “Our goals is to strengthen the market, by reaching customers who want the freshest local produce but are too busy with work, home, or kids’ soccer to get to the Farmers Market.”

    Here’s how it works: customers go on line to place an order, Fresh Nation submits the specifics to the participating farmers, and on market day a Fresh Nation personal shopper puts together each order and delivers it in his or her own car (think Uber meets grocery delivery). The consumer pays market price as well as a $5 delivery fee on orders under $75, and Fresh Nation gets a discount on the wholesale price and pays the personal shoppers an undisclosed commission.

    Lee, a self-describer serial entrepreneur, spent 20 years in technology and e-commerce businesses when he and his wife Melanie decided to open a Farmer’s Market in Danbury, CT two years ago. The experience prompted them to “overlay the technology” and found Fresh Nation.

    Looking to expand, Lee has identified 1,000 potential delivery areas with appropriate proximity to a local farmers market across the nation. “We have no infrastructure – no warehouse, trucks or inventory,” he said. In certain markets, Fresh Nation can deliver five days a week, in others the availability is more limited.

    The other challenge is tailoring the on-line offerings to the available produce, especially time-sensitive fresh items such as strawberries (early season) or corn (later in Connecticut.)

    Lee does not expect Farmers Market devotees to give up that shopping and community experience. “All of our customers normally do not shop at Farmers Markets,” he said.

    Personally, I would opt for Fresh Nation any week when I could not get to my local market, which is only open on Saturday from 10 a.m. to 2 p.m. I also would rather order specific items than sign on for an assortment of delivered produce, particularly because there are very few tomato eaters in my household. So it works for me.

    Fresh Nation and the other farm-to-table delivery services are clearly meeting consumer demand, which suggests to retailers that there is an opportunity here, even though many in the food business believe that "fresh" and "online" don't necessarily go together. Fresh Nation is looking to prove that the combination of on-line ordering, the freshest available produce and home delivery can be a game changer.

    Traditional retailers would be well advised to figure out how to play the game as well.


    Comments? As always, send them to me at kate@morningnewsbeat.com .
    KC's View:

    Published on: June 25, 2014

    by Kevin Coupe

    It ends up that the "crapstorm" was appropriately named.

    "Crapstorm" is the word that one media outlet used to describe what happened when a three-year-old girl who had been mauled by three pit bulls and suffered enormous facial damage, was asked to leave a KFC restaurant (where her grandmother had taken her, hoping she'd be able to swallow the mashed potatoes even if her broken jaw) because the condition of her face was upsetting other customers.

    We reported on this the other day, impressed that immediately after the grandmother went on Facebook to complain about the treatment, KFC's corporate management moved quickly to address the controversy, apologizing and sending the family a $30,000 check to put toward medical expenses.

    Except that now, there are numerous reports that after several investigations into the matter, there appears to be no evidence that the eviction from the KFC ever happened. There's no question about the pit bull attack itself, but a review of surveillance tapes from the KFC shows nothing to suggest that anybody was asked to leave.

    KFC has said that the family can keep the $30,000 for the child's medical bills, and it considers the matter closed. (Which seems really classy on KFC's part.) We haven't yet heard from the family.

    But all I can think about is how, if these new reports are true, this three-year-old girl has been taught a terrible lesson by her family about how to exploit an already terrible situation.

    It is an Eye-Opener … and depressing as hell.
    KC's View:

    Published on: June 25, 2014

    The New York Times this morning reports that Amazon is the subject of an official complaint in Germany, filed by book publishers there who say that the e-commerce behemoth is violating competition and antitrust laws.

    The complaint seeks an official government probe into Amazon's decision to delay shipments of books from Bonnier, a publisher there, in the same way that it has been delaying shipments of books from Hachette and its various imprints in the US.

    In both cases, the dispute appears to be over revenue derived from e-books.

    Amazon is not commenting on the complaint, which says, in part, that “Amazon’s business conduct not only affects those publishers involved, but poses a danger to all who offer e-books in Germany."

    The Times writes that "Germany, the birthplace of modern printing technology, has a proud tradition of book publishing. Laws intended to minimize competition among booksellers create an environment that makes it easier for lesser-known authors to be published.

    "But the cozy world of German publishing has been slow to adapt to the Internet age, whether in online sales or digital publishing. That has left a vacuum, which Amazon, which is based in Seattle, has swiftly moved to fill. According to industry estimates, it controls as much as 70 percent of the German market for online sales of printed and electronic books."

    Meanwhile, in the US, the Times is reporting that Hachette "is bulking up and diversifying," acquiring the Perseus Books Group, the nation's sixth largest trade publisher, a move that could "provide Hachette more leverage in its negotiations with Amazon because it will give the company control over more attractive books … It will also help Hachette diversify away from its dependence on fiction best sellers by adding more nonfiction and academic books, which are less dependent on Amazon for sales."

    Terms of the deal were not disclosed. Hachette said that the goal of diversifying and expanding was part of its long-term strategic plan and not related to the Amazon dispute.
    KC's View:
    I wonder to what extent Amazon is surprised by the fact that these companies are not rolling over and accepting its dominance, agreeing to whatever terms the e-tailer thinks are appropriate. in both cases, it suggests that the disputes will be drawn-out, with nobody giving in any time soon.

    When thinking about the German case, it occurred to me that Gutenberg must be rolling over in his grave. But then I started thinking about Johannes Gutenberg, and realized that back in the 15th century, when he was inventing moveable type - which only helped make possible the Renaissance, Reformation, Age of Enlightenment and Scientific Revolution, and certainly should be considered one of the top five inventions ever - he actually was one of the world's great disruptive influences.

    Think about it. For some 4,000 years before Gutenberg, books were created by hand … and then this guy comes along and essentially tells all the people employed making books, and all the people who read books, and all the people would could not read books, "Think different."

    I have no idea where Gutenberg would come out on this argument, except that I do know that his invention made books accessible to everyone … that was the great gift of the printing press - it made learning available to the masses. Not sure how the legalities will play out, but Amazon has to be careful not to be on the wrong side of this argument.

    Published on: June 25, 2014

    The firing of Market Basket CEO Arthur T. Demoulas and two other senior executives by the company's board of directors, as a result of a longtime family rivalry and debate over the company's financial health, resulted yesterday in a rally of an estimated 300 employees outside company headquarters and the resignation of at least six executives in protest of the firings.

    The Boston Globe reports that the execs who resigned were CFO Dan Mulligan, Director of Advertising Jay Rainville, Executive Vice President Jim Miamis, Deli Director Ronald Carignan, Assistant Director of Operations David McLean, and Sue Dufresne, an accountant with the company.

    The Globe story says that "Tuesday’s rally in Chelsea saw several speakers, including McLean, Dufresne, and others with the company, address employees from as far as New Hampshire in the parking lot near the company’s largest store." With calls of "We are Market Basket," the participants called for reinstatement of Arthur T. Demoulas as CEO.

    Demoulas’s similarly-named cousin, Arthur S. Demoulas, has led a longtime fight to oust the CEO due to a conflict over the company’s finances. The fight is characterized differently by the two sides. The Arthur S. Demoulas faction argues that Arthur T. Demoulas spends money irresponsibly and refuses to take direction from the board. The Arthur T. Demoulas side maintains that his cousin is fueled by greed, only interested in raising prices, cutting employee compensation, and threatening the formula that has built the company.
    KC's View:
    Again, without knowing all the details of the family feud, it certainly seems like Arthur T. is the guy I'm rooting for in this race … and that Arthur S. may be misinformed about his own role in the company. He may control the board and the co-CEOs he brought in to replace his cousin, but I suspect he's not really listening to the "We are Market Basket" cries that are taking place in his parking lot.

    See, he thinks that he is Market Basket. But he's wrong. And he could sink what has been a thriving successful business in about two minutes. Because those people on the front lines, and the people who are resigning out of a sense of loyalty and moral outrage, are the people who really are that company.

    No matter how much he has deluded himself.

    Most people would be thrilled to have this sort of employee buy-in. But this guy may just flush it away.

    Published on: June 25, 2014

    The Wall Street Journal sums up Tesco's continuing problems in the UK this way: "Since the financial crisis, British consumers have changed the way they shop, but Tesco hasn't changed the way it sells … To some extent, Tesco is the victim of a seismic shift in shopping habits being felt on both sides of the Atlantic. Price-conscious shoppers now go to smaller, local stores and discounters for everyday essentials—or get them online—and visit upmarket stores for treats. For many families, weekly food shops in the large out-of-town superstores Tesco pioneered are a thing of the past."

    The bigger problem, the story suggests, is that even though the state of the company is not of the current CEO's making, Philip Clarke may also not be the guy with the vision and leadership muscle to dig Tesco out of the hole it is in. At least, that's the argument of some shareholders, who feel that the company's board and executive bench simply is not strong enough to support Clarke when he is right, and stand up to him when he is wrong.
    KC's View:
    The WSJ is right. A sea change has taken place. And the real question is whether Clarke is the guy to navigate what are unfamiliar and treacherous seas filled with enormous icebergs with names like Aldi and Lidl.

    Published on: June 25, 2014

    Mashable reports that the federal Aviation Administration (FAA) has issued a ruling saying that delivering packages via drone, or any commercial use of drone aircraft, is illegal under its regulations.

    While the FAA did not specifically mention Amazon's plans to develop deliveries-by-drone service, as revealed by CEO Jeff Bezos late last year on "60 Minutes," the ruling seemed specifically targeted at the e-commerce behemoth.

    However, according to the story, Amazon was "unmoved."

    This "has no effect on our plans," Paul Misener, Vice President of Global Public Policy for Amazon, tells Mashable. "This is about hobbyists and model aircrafts, not Amazon."
    KC's View:
    The FAA ruling seems pretty clear, but it seems like Amazon believes it is not bound by the same restrictions that affect mere mortals.

    Unless, of course, it doesn't affect Amazon because the whole drone thing was a head fake to begin with.


    BTW…I don't know about you, but if I have to choose with domestic drone traffic that spies on citizens and potentially carry weapons, and domestic drone traffic that delivers groceries and books and beer…I'm going with the latter. Maybe the FAA has its priorities all wrong…

    Published on: June 25, 2014

    The Conference Board said that its June consumer confidence index rose to 85.2, up from a revised 82.2 in May, the highest it has been since January 2008.

    "The momentum going forward remains quite positive," Lynn Franco,said a Conference Board economist.

    According to the Associated Press story, "The index compiled by the Conference Board shows that confidence has been rising steadily since bottoming at 25.3 in February 2009. It's well above last year's average of 72.3. But it still hasn't returned to full health. Before the recession, the index usually topped 90."
    KC's View:

    Published on: June 25, 2014

    In Minnesota, the Star Tribune reports that Target "has broadened its free shipping policy to simplify online shopping for customers and better compete with Web retailers.

    "Now, nearly all online orders of $50 or more on Target.com, with the exception of oversized or heavy items, will qualify for free shipping. Previously, only some items were eligible, but online shoppers didn’t always realize that and were sometimes frustrated when they checked out and discovered they were being charged for shipping because only some of the items in their cart qualified."

    According to the story, "The development is one of a number of ways the Minneapolis-based retailer is trying to catch up and accelerate its digital efforts after years of being criticized for being behind the curve. It recently announced the formation of a digital advisory council to help it innovate faster and said it will hire at least 50 more software engineers to bolster its Target.com and mobile teams. It also is testing same-day delivery in Minneapolis, Miami and Boston."
    KC's View:

    Published on: June 25, 2014

    • Walmart-owned Sam's Club said yesterday that it has launched Sam's Club Travel, described as "a savings-centered online booking service bringing industry-leading selection, value and 24/7 support to Sam’s Club members for all business and leisure travel needs.

    "The new digital service, available to members at SamsClub.com/travel, is a collaboration with Tourico Holidays, a worldwide leader in innovative wholesale travel services. Scaling Tourico’s proprietary technology to millions of warehouse club members, Sam’s Club Travel offers savings on 4,500 worldwide destinations, 90,000 hotels, more than 6,000 attractions in 800 cities, 150 airlines, 18 car rental brands and 13 cruise lines, available for a la carte purchase and vacation packages."
    KC's View:

    Published on: June 25, 2014

    • The Chicago Tribune reports that Instacart, the grocery personal shopping service,"is adding Plum Market to its lineup in Chicago, bringing a wider variety of organic and local foods, wine, beer and spirits to users of the growing service … Plum Market is the sixth Chicago-area chain for Instacart, joining Costco, Jewel-Osco, Mariano’s, Stanley’s and Whole Foods Market."
    KC's View:

    Published on: June 25, 2014

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

    The Los Angeles Times reports that Albertsons has agreed, pursuant to an agreement with a number of county district attorneys in California, "to pay more than $3 million to settle a lawsuit accusing the grocery chain of illegal disposal, transportation, storage and mismanagement of hazardous waste at its 188 California locations … The company agreed to pay $3.4 million, including $2.7 million in civil penalties; $300,000 for the cost of the investigation; and $350,000 for supplemental environmental projects."

    Albertsons is writing the checks, but not admitting any guilt or liability.


    Interesting piece in the Wall Street Journal noting that "food and restaurant companies are under increasing pressure to make products healthier, but sometimes they don't want customers to know when they have cut the salt or fat … It might seem like food companies would want to trumpet their health initiatives as much as possible. Many times they do, but companies are often cautious because altering the recipe of a successful product to cut salt, sugar, fat or other ingredients risks changing flavor and texture.

    "And consumers don't always react with their pocketbooks the way the clamor for better nutrition might suggest."

    It is that age-old problem…people who say one thing and do something else.


    The Associated Press reports that Whole Foods "will pay about $800,000 in penalties and fees after an investigation found the grocery retailer was overcharging customers in California. State and local inspectors discovered that the chain overcharged customers, didn’t subtract the weight of containers and sold prepared foods by the item rather than by the pound … Whole Foods must pay penalties to various government entities and appoint pricing accuracy managers, and each of the 74 Whole Foods stores in California will face random audits."


    The Chicago Sun Times reports that in the wake of improved sales and earnings announced this week, "Walgreen executives said they are considering their option to complete a takeover of Swiss health and beauty retailer Alliance Boots — a move that could involve an overseas reincorporation — but they won’t be ready to discuss their next step until late July or early August … Walgreen acquired an initial 45 percent stake in Alliance Boots in 2012, and it has an option to buy the rest of the company next year. Alliance Boots runs the largest drugstore chain in the United Kingdom."


    Bloomberg Businessweek reports that Starbucks, having just announced that it is selling handmade sodas in select markets, "is now testing three flavors of Greek-yogurt smoothies as it continues trying to broaden its appeal beyond coffee … The sweet greens, mango carrot and strawberry drinks will be sold in about 170 locations in San Jose, California, and St. Louis, the company said in a statement. A medium-sized smoothie has 170 calories to 230 calories, depending on the flavor, and customers can add kale or extra Greek yogurt. While prices will vary by market, a 16-ounce smoothie is $5.95 in San Jose."

    It is expected that packaged versions of the smoothies could find their way into grocery stores sometime next year.
    KC's View:

    Published on: June 25, 2014

    Eli Wallach has passed away. The Emmy and Tony award winning actor was 98.

    Among Wallach's movie credits you might be familiar with: Baby Doll, The Good, the Bad and the Ugly, The Magnificent Seven, Lord Jim, The Misfits, How The West Was Won, How To Steal A Million, Cinderella Liberty, The Deep, Mystic River, The Ghost Writer and Wall Street: Money Never Sleeps. In other words, tons of movies, starting in 1956 and going right through 2010.

    That's in addition to scores of plays and TV programs, and being part of the founding class of The Actors Studio in 1948, along with a fellow named Marlon Brando.
    KC's View:

    Published on: June 25, 2014

    Regarding the ongoing Amazon-Walmart competitive wars, we got an email from James M. Kenderdine, who, for the purposes of context, we should identify as the Professor Emeritus of Marketing and Supply Chain Management at The Michael F. Price College of Business at The University of Oklahoma:

    I have followed and studied Wal-Mart since the early 1970’s. In the “after Mr. Sam” era, it has often seemed as though their only strategy has been to squeeze costs out of their operations. For a while that worked well. Creative sourcing, improving distribution and streaming operations fueled their performance up until the last few years. In an effort to keep the system producing it seems that some WM managers may have gone too far in their attempts to control labor and other costs.  the economy the last couple of years has highlighted WM’s vulnerability just as Amazon has begun to make it quite clear that as far as they are concerned, Wal-Mart is so antiquated that it might as well retire to a nursing home.

    Well, hang on … I think that Wal-Mart has found its second wind and a new strategic vision for the company - fueling profit growth through increasing the value it adds to what the consumer buys.  In retrospect they have been going down this new road for several years, but doing it in a way that seemed like they were just doing “business as usual”.  With their Neighborhood Markets they have been positioning themselves to appeal to upscale consumers, merchandising stores to compete with Target and TJ Max, and now to locating those markets in  high income areas where sales don’t depend on so heavily on price sensitive customers. Adding pharmacies to these markets is another part of it.

    The emergence of Wal-Mart Express - 15,000 sq foot grocery and gm C stores - and the pending opening of the Indiana distribution center devoted to e commerce are the new two pieces of the plan.  There are a lot of locations - rural and urban (even center city) where Wal-Mart can open its new Express format - in Oklahoma they are opening one later this year on the Interstate half way between Tulsa and Oklahoma City.  Grocery, gasoline and tobacco sales alone can make theses units successful, but if you look at them as modern versions of the Sears and Montgomery Ward Catalog stores of the post war period, the beauty of the strategy becomes obvious - Order On line, delivered free to the  Wal-Mart Express/ Neighborhood Market/ Super Center/Sam’s Club most convent to you?

    Forget paying $100 a year to Amazon for free shipping, Wal-Mart on line will give it to you free! Plus with WM’s distribution system, they will be able to get the product to you for a lot less than it will cost Amazon. (WM has a much cheaper “last mile”.)

    So while Wal-Mart has looked like the underdog against Amazon the last few years, it appears that they have actually been covertly developing a strategic end-run around Amazon, one that capitalizes on Wal Mart’s core strengths and which goes after Amazon’s weaknesses.

    Now, if that new Indiana distribution system includes a pharmacy, well, then I think that Walgreen and CVS have something other than each other to worry about.

    I haven’t been this excited about something since the birth of my youngest grandson five years ago.  Almost makes me wish I wasn’t retired.

    Really enjoy your newsletter.


    And I really enjoyed your analysis. Keep those cards and letters coming in…




    On the subject of Uber, one MNB user wrote:

    As a New Yorker I don't feel so bad for the taxi industry when it comes to Uber...in fact prior to Uber when I needed a taxi I would prefer a licensed TLC car (fix rate) ride than the "medallion" fleet. Fortunately I can easily get one going to midtown or downtown as I live at 115th street. TLC and now "Green TLC" are NOT permitted to pick up below 110th street to "protect" the medallion fleet. Thats right stay empty until you get all the way back to 110th on the west side/96 on the eastside....these are the guys I feel badly about and will go away fast due Uber and the "Medallion Fleet" lobby…..

    And here is who "owns" the medallions, agents and corporations...only 29% are private held!

    The latest bid for an independent medallion was $1.26 million... how stupid is that!


    From another reader:

    There seems to be a lot of discussion around how Uber is disrupting the traditional taxi business. I have not caught anywhere in the discussion on MNB the implications that could come into play if there is a traffic incident causing injury during one of these Uber rides. It seems that the insurance for the driver could deny the claim based on the fact that they are not insured for commercial transit yet are using their vehicle for commercial purposes. I could be completely missing something as I am not that familiar with Uber as I do not use taxi service. But I honestly do not think I am safe in a taxi by any stretch of the imagination.

    Interesting market change to a segment that is clearly in desperate need of change!





    Got the following email from MNB reader Ryan Murphy, regarding a long commentary I did about Netflix:

    I'm a long time reader of MNB, even though I am no longer in the food business.

    In your first article today, you wrote the following:

    At this point, the MNB audience - largely made up of retailers and manufacturers in a wide variety of categories - may be reading this column and saying to themselves, We're not in the entertainment business. What the hell is Kevin doing bothering us with all this stuff on a Monday morning? After all, we have Amazon and Walmart to worry about. (Unless, of course, you happen to be Amazon or Walmart…in which case you have each other.)

    My reason is simple. It is because Netflix is challenging the status quo, keeping people guessing, and yes, trying to disrupt the way business traditionally has been conducted.


    I'd like to answer your question a different way.  Entertainment is highly relevant to today's retailer, especially as retailers invest more and more in social media.  Check out this study on what emotions encourage people to spread information online.  Topping the list are awe, laughter and amusement - usually the result of good entertainment.





    Got the following email from a Food Lion exec after I wrote about the new Delhaize America CEO:

    I’m looking forward to meeting Kevin Holt.  According to the bio we received from Frans Muller, he is coming from middle America, places his family high in his priorities, has some IT background and LOVES BASEBALL.  I know we all wish him good luck and welcome him to the team.

    (And I’m one of those  “really good people who work there, and work very hard, and deserve to have things go well for them” that you know, right?)


    Yup.




    And responding to Michael Sansolo's column about Tesla essentially making all of its patents public, MNB reader Ron Rash wrote:

    An oft quoted maxim of branding and marketing, but not often practiced, is to "Promote the category first, and then the brand."  (Al and Laura Ries from the "22 Immutable Laws of Branding".) This seems to be a profound, if unusual, example of that.

    However, I suspect Tusk is already moving on to version Tesla.2.
    KC's View: