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    Published on: July 22, 2014

    by Michael Sansolo

    Technology and changing societal norms have wiped out Wilfred Rose’s career, but don’t get upset. In just a few sentences you are going to lose any sympathy you might have for him. Just keep in mind that Rose, now in a New York jail, brings a tale of today’s changing environment.

    Rose, you see, was known as an excellent pickpocket who, according to a wonderful article this past Sunday in the New York Times, spent decades sizing up potential victims and stealing their wallets and more. Not surprisingly his favorite venue for theft was the oft-crowded New York City subways.

    But that was then. As Rose explains in the article, changing times are destroying his profession. Thanks to ATMs, people are carrying far less cash these days. Men are wearing tighter fitting pants instead of suits, which also hampers pickpockets. Plus, as Rose tells the Times, younger criminals are heading in new directions, such as putting devices on ATMs to skim cards and passwords, giving us consumers new things to worry about.

    ‘We’re disappearing,” he said. “In a few years, there won’t be any of us left.”

    While it’s impossible to work up any sympathy for Rose, it’s stunning how easy it is to find so many legitimate businesses in exactly the same boat and even, at times, echoing his exact words. We hear it all the time concerning especially specific types of family owned business. “In a few years, there won’t be any of us left.”

    And that’s right, unless those very same business people do what Rose could not: CHANGE!

    I saw an interesting example of the need for changed thinking as I recently visited my local supermarket to unload a small bagful of coins that had built up in my office. Anyone in my age group who ever worked a cash register knows that our once important skills of counting change or wrapping coins have all fallen prey to automation. Now I just visit the machine, dump in my coins and let the magic happen.

    But this time the machine gave me pause for what it could not do. My intention was to convert the coins into a gift card for the supermarket yet when I went through the touch screens to make my selection the very supermarket housing the machine was not among the choices.

    I could select some local restaurants or even, but not the store itself - even though my intention was to spend the money right there, to reward the store for a service I value.

    After selecting iTunes - always an easy choice - I went to the store’s service counter and asked about the omission. The woman working the counter said she wasn’t sure why that was the case, but it was.

    Now I understand she’s not the president of the company (a rather large chain by the way) and has no control over what I found. But I don’t understand the policy and I hope my question got forwarded on upstairs.

    The reality is that supermarket competition has and continues to change. We all understand that the battle for the food dollar goes on meal by meal with restaurants and we know without question that is a big part of the battlefield we face tomorrow.

    Yet, here was a supermarket that got me in the door and with little effort had me willing to dedicate my collection of coins to my next shopping trip. Rather than grab me, it was helpfully sending me to Chili’s or Amazon - the competition.

    The thing is, we are delighted to see Wilfred Rose’s occupation get changed out of existence. I can’t imagine one of us bemoaning the collapse of the pickpocket industry and questioning why Rose and his colleagues didn’t find ways to adapt earlier.

    Still he provides an important lesson in making sure we don’t allow anyone to take away our hard-earned money. Whether it’s on the subway or at the front end.

    Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: July 22, 2014

    by Kevin Coupe

    Give a man a head of lettuce, and he'll have a salad for dinner tonight. Teach a man how to grow a head of lettuce, and maybe he can help change the world…

    Interesting piece in the Guardian about Grove Labs, which is "designing an appliance to grow leafy green vegetables indoors. Its two founders, who conceived of the business while students at the Massachusetts Institute of Technology, envision people’s homes having 'groves,' or spots to grow their own fresh food. The company, which recently raised $2m in 'seedling' funding, says it intends to help people grow food productively at home using sensor-controlled gardens and smart phone apps."

    According to the story, "the Grove Lab founders are among a growing number of entrepreneurs who are getting a green thumb. They’re using information technology and new lighting techniques to advance the field of 'building-integrated agriculture,' or growing food in structures such as warehouses, rather than greenhouses.

    "Proponents contend that indoor farming and urban farming are necessary to feed a growing global population. Urbanites could potentially purchase locally grown, pesticide-free food year-round, lowering emissions associated from tractors and shipping products. Producing food indoors also means that consumers are shielded from disruptions in the food supply caused by natural disasters and that farmland could be restored to ecosystems, such as forests, that could absorb greenhouse gases. Growing food indoors uses 98% less water and 70% less fertilizer than traditional methods, and has a higher yield, according to the Association for Vertical Farming."

    To be sure, at this point in their development "indoor farms still contribute little to the global food system because production costs are higher than conventional growing methods," the story says. "And they tend to use more electricity. But businesses are starting take advantage of new technologies, including energy-efficient LED lighting and automated systems, to bring down costs. As these technologies become standardized, indoor farming will make sense in more locations, says Chad Sykes, CEO of Indoor Harvest, which builds custom indoor farms for professional growers."

    The story goes on to say that "it remains to be seen whether indoor farming can displace a significant portion of the current food production or serve consumers who can’t afford more expensive produce. But many indoor-farming entrepreneurs say their technology can serve to diversify the current food system, allowing food to be consumed where it’s produced."

    On the other hand, I think that recent history would suggest that these kinds of disruptive changes are not only possible, but likely … when people bring considerable brainpower to the act of finding ways to do things like indoor farming.

    It's been years since I saw it, but one of the in-store features that I best remember is an enormous hydroponic facility created by Fiesta Mart down in Texas with the stated goal of providing its own fresh produce to the greatest extent possible. That concept, if I recall correctly, was not economically sustainable … but then, you see hydroponic tomato plants in a Price Chopper store in Latham, New York, and you realize the power of such an approach.

    Sure, it remains to be seen whether indoor farming is a big idea with legs. But at the very least, it is an Eye-Opener … and I wouldn't bet against it.
    KC's View:

    Published on: July 22, 2014

    Arthur T. Demoulas, the recently fired CEO of Market Basket, has released a statement addressing the tumultuous events enveloping the company, where employees have protested and called for his reinstatement and slowed down shipments from its warehouses to its stores to the point where the company has been virtually crippled - which has led to the firing of numerous management-level executives.

    The statement reads:

    “This is the first time I have commented publicly on the recent events at Market Basket. The success of Market Basket is the result of two things: a business model that works and the execution of it by a dedicated and impassioned team of associates. Their fierce loyalty to the company and its customers has always been deeply valued. In the final analysis, this is not about me. It is about the people who have proven their dedication over many years and should not have lost their jobs because of it. I urge that they be reinstated in the best interest of the company and our customers.”

    The statement did not address Demoulas's own firing, which came as the result of efforts by Arthur T. Demoulas’s similarly-named cousin, Arthur S. Demoulas, 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 to a New England success story.

    Meanwhile, the Boston Globe reports that yesterday, "for the second time in four days, thousands of Market Basket employees flocked to Tewksbury to protest the firing of former Market Basket CEO Arthur T. Demoulas and demand his re-instatement.

    "Leaders of the employee movement, who were fired by courier by the company’s current leadership late Sunday afternoon, said their fight must now head to the stores.There appeared to be growing momentum for a boycott of stores at the rally. Employees had previously encouraged customers to continue to shop, but organizers of the rally gave several minutes for state politicians to speak in support of a boycott, which they had previously endorsed over the weekend. The idea was met with cheers. More than 30 elected officials have signed on to the boycott proposal at this point."
    KC's View:
    Of course, it seems unlikely that the execs can or would be reinstated without Arthur T. Demoulas being given back the CEO job. And it is hard to know whether the backers of Arthur S. Demoulas are so entrenched in their positions that such a change is simply impossible. But if they don't do something, Market Basket may lose everything that the Demoulas family has worked so hard for … and it will be impossible to come back.

    Published on: July 22, 2014

    The Wall Street Journal has a piece about what Tesco must do now that it has hired Unilever's president of personal care, Dave Lewis, to replace its current CEO, Philip Clarke, and suggests that "the company's preoccupation with being the biggest U.K. grocery retailer means it has failed to keep pace with changes in the market."

    The problems, the story says, stem from the fact that Tesco's "big is best" approach no longer is relevant: "Tesco doesn't have a low enough cost base, though, to offer bargain prices like discount retailers such Aldi or Lidl. It also lacks the cachet among bigger spenders to rival chains such as Waitrose." And its "turnaround plan focused on doing everything marginally better for all shoppers, rather than acknowledging different customers increasingly want different shopping experiences."

    With a new CEO, the Journal writes, "Tesco has an opportunity to rethink its strategy. One approach could be to divide its holdings into stores that target different types of customers. For example, it could target stores focused on value ranges, high-end products and a midmarket format … That would inevitably mean Tesco consciously getting even smaller. But the right cost base for each type of store could help improve trading profit margins."

    But a key metric for Lewis's success will be whether he - as the first CEO in the company's history to be brought in from the outside - is willing to "break with the past."
    KC's View:
    To do what the Journal is suggesting, new management won't just have to re-engineer the company's infrastructure. It'll have to re-engineer the culture … and that will be very hard to do.

    Published on: July 22, 2014

    The annual Harris Poll EquiTrend (EQ) study is out, and for the first time it looks at grocery retail brands on a regional basis, using four census regions - Midwest, Northeast, South and West - and examining "three key factors of brand equity: Familiarity, Quality and Purchase Consideration."

    According to this year's poll, Hy-Vee gets top marks in the midwest, Wegmans is rated the best grocery brand in the Northeast, Publix gets the honors in the south, and Costco is the best grocery brand in the west.

    "These stores put an emphasis on building a relationship with the customer," says Michael Treboni, EVP of retail professional services at Nielsen, which acquired Harris Interactive and The Harris Poll in early 2014, "and it's paid off with positive Brand Equity." 

    According to the poll, "also ranking above the Midwest Region Grocery Store category average are Meijer, Giant Eagle, Kroger, Whole Foods Market, Trader Joe's, Walmart (Groceries) and Jewel & Jewel-Osco … Trader Joe's, Whole Foods Market, ShopRite, Hannaford Bros., BJ's Wholesale Club (Groceries), Stop & Shop, Costco (Groceries), Price Chopper and Giant Food Stores also rank above the Northeast Region Grocery Store category average … Walmart (Groceries), H-E-B, Trader Joe's, Harris Teeter, Whole Foods Market, Kroger, Sam's Club (Groceries) and Target (Groceries) … Other brands to rank above the category average in the West Region include Trader Joe's, Whole Foods Market, Safeway and Stater Bros. Markets."

    The poll is based on interviews with more than 41,000 U.S. consumers.
    KC's View:

    Published on: July 22, 2014

    • The Associated Press reports that Walmart "is upping the price game for the crucial back-to-school shopping season. The world's largest retailer has cut prices on 10 percent more back-to-school items compared with last year, signaling that the second-most important shopping season behind the winter holidays will be fiercely competitive. The Bentonville, Arkansas-based retailer also said that it's increasing the number of back-to-school products sold on its website by 30 percent to 75,000 this year from last year."

    Timing is everything … and interestingly, USA Today has a story saying that "back-to-school shopping is no longer a frenzied one-day spending spree. Families are spending more, but they are doing so over a longer period of time as they search for the best deals.

    "Families are expected to spend $670 on average on back-to-school shopping, up 5% from last year, according to data out Thursday from the National Retail Federation. That includes spending on school supplies, clothes and electronics. But analysts and parents say the slow economic recovery, plus access to near-constant online deals, means back-to-school shopping is no longer a big event."
    KC's View:

    Published on: July 22, 2014

    The Financial Times reports that Karl Albrecht, co-founder of the Aldi discount chain and reputedly Germany’s richest man, has passed away. He was 94.

    Karl Albrecht founded Aldi with his lkate brother, Theo, in 1961, and, FT writes, "a year later they split the business, Karl taking southern Germany with Aldi Süd, and Theo the north with Aldi Nord. Later they divided other European and world markets. Aldi Nord took northern and western Europe. Aldi Süd had the Alpine countries, eastern Europe and English-speaking nations."

    The story notes that "Theo left most of his fortune and control of Aldi Nord to a family foundation that bears the name of their parish. Aldi Süd said Karl Albrecht, who retired from management 20 years ago, had as long ago as 1973 left his wealth and control of Aldi Süd to a family foundation. It is named Siepmann, his mother’s maiden name."
    KC's View:

    Published on: July 22, 2014

    • Sears-owned Kmart announced that it has launched a new "Shop Your Way member savings exclusive: $1 or less check cashing.  Members can cash payroll and government checks up to $2,000 and personal checks up to $500 – all for $1 or less per check."

    The company said that it is "tapping into the need for people who want the convenience of cashing checks where they shop or do not have access to traditional bank accounts. Now Kmart offers the service at a dramatically better price to deliver even more value to its Shop Your Way members."

    Shop Your Way is described as "a free social shopping destination and rewards program offering millions of products, personalized services, and advice."
    KC's View:

    Published on: July 22, 2014

    • Ahold USA has announced that its current EVP of operations, Bhavdeep Singh, has been named EVP of new formats, responsible for defining and developing new format opportunities within the company. It is a new position at Ahold.

    Singh will be succeeded in his operations role by Mark McGowan, the company;s EVP of merchandising.
    KC's View:
    Be interesting to see what Singh comes up with, because I think it is fair to say that Ahold is not seen as a vital laboratory for new and exciting retail format development.

    Published on: July 22, 2014

    …will return.
    KC's View: