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    Published on: August 15, 2014

    by Kevin Coupe

    The New York Times has a story about how retailers - both offline and online - are looking to create more personalized and customized shopping experiences, using a combination of data and actual human beings to create stronger and enduring connections to shoppers.

    One example: " Stitch Fix, a women’s clothing retailer that sends its customers boxes of clothes that are picked by a combination of personal stylists and big data. It is one of a handful of start-ups making aggressive bets that highly personalized online shopping, in which sites choose items for you based on your preferences and their algorithms, can deliver a better e-commerce experience.

    "Trunk Club, for example, is similar to Stitch Fix, but it is for men and is more expensive. Club W tailors wine to its monthly subscribers, who fill out a 'palate profile' when they sign up. And Birchbox, a beauty store, delivers monthly installments of sample-size goods tailored to your needs for $10 for women or $20 for men."

    The same goes for some bricks-and-mortar retailers, the Times writes: "Retailers big and small are trying to personalize shopping in physical stores, too, say retail analytics companies like CQuotient. These efforts include loyalty programs that let sales employees easily pull up account histories of their customers’ purchases, and even in-store beacons that communicate with a shopper’s cellphone and can send relevant offers and coupons if the shopper uses the store’s app … Retailers like Urban Outfitters, Mango and Zara appeal to their mobile-friendly young shoppers with apps that offer benefits like exclusive access, rewards and even, in the case of Urban Outfitters, a streaming radio station that evokes its hip shopping experience."

    You can read the entire story here.

    Now, this is something about which I feel very strongly … that retailers looking to create for themselves a differential advantage need to start mining data - sometimes by computer and sometimes just by paying attention to the people who shop their stores, depending on your technological capacities - to start making recommendations, creating subscription programs, and connecting in meaningful, relevant ways to their shopper.

    I liken this to having a great bartender … like Morgan at Etta's, in Seattle, who I've often written about. When I walk in Etta's (and I don't go in that often, since my primary residence is about 2,800 miles away), Morgan knows who I am, knows what I like, and usually chooses a wine for me to try even before I sit down at the bar. It usually is something I've never tasted before, but that he thinks I'll enjoy … and he's right about 99 percent of the time.

    Imagine if more retailers showed that kind of interest and prescience about their shoppers. It'd be an Eye-Opener.
    KC's View:

    Published on: August 15, 2014

    The Wall Street Journal reports this morning that Supervalu is "investigating a potential data breach that might have affected more than 1,000 stores, according to people familiar with the situation, the latest attack against a big merchant in recent months.

    "The breach appears to have taken place in late June or early July and may have resulted from hackers installing malicious software onto the company's point-of-sale network, these people said. That is the system that includes the cash register and terminals that handle credit card and debit card transactions."

    Supervalu has not yet commented on the report, and has not yet informed customers of the possible breach, though this is not uncommon for retailers to keep their cards close to the vest until the extent of the breach has been established.

    The Journal puts the potential breach into context:

    "An attack on the company's point-of-sale system would be similar to other recent high-profile data breaches, most notably the massive hack that occurred at Target Corp. during the winter holiday-shopping season. In the incident, thieves stole 40 million payment-card numbers and the personal information of 70 million shoppers.

    "Since then, hackers also have taken aim at a number of merchants, including luxury retailer Neiman Marcus Group, restaurant chain P.F. Chang's China Bistro Inc., and Goodwill Industries International Inc. thrift stores.

    "Any new data breach is likely to stoke the growing concerns about security among merchants, consumers and card-issuing banks. Although shoppers usually aren't liable for purchases they didn't make, the incidents create headaches among consumers who need to file paperwork attesting that they didn't make the purchases."
    KC's View:
    Without knowing all the details, it is hard to comment … we're going to see an increasing number of these stories, I'm sure. I was talking to a knowledgeable tech guy the other day who told me that is is almost impossible to keep up, especially because the bad guys in such cases often can be supported by rogue states that have tons of money to throw at the creation of breaching technologies.

    I do think that retailers are going to have to balance the need for discretion as law enforcement conducts investigations and the need for transparency to their customers.

    Published on: August 15, 2014

    Bloomberg Businessweek reports this morning that when Amazon decided to pick a pricing fight with Disney, blocking pre-orders of physical copies of both Captain America: The Winter Soldier and Muppets Most Wanted, which are scheduled to come out in the next few months, Walmart's online division decided to respond by offering preorders at a 40 percent discount.

    The offer, Walmart said, "helped boost “Captain America” orders by 90 percent, while sales of other Disney titles rose 40 percent."
    KC's View:
    I know Amazon feels the price game is one it has to win. But by opening the door for people to try alternative sites, it also may be helping the competition establish a foothold where it did not have one before. Amazon has thrived by being the first choice of many online consumers, but that advantage could erode over time. This is nuts!

    Published on: August 15, 2014

    Bloomberg Businessweek reports that Starbucks "is immediately changing its policies so that employees never have to work opening and closing shifts back to back, Cliff Burrows, president of the Americas region, said in a letter e-mailed to more than 130,000 employees across the U.S. today. Starbucks also will transfer workers to a store closer to their home if their commute is longer than one hour, he said."

    The change in policy came less than 48 hours after the New York Times published a story about a single mother employed by Starbucks who was struggling with hours set up by automated software, often dealing with what is called "clopening,"

    The Times writes this morning that "the change comes amid a growing push to curb scheduling practices, enabled by sophisticated software, that can cause havoc in employees’ lives: giving only a few days’ notice of working hours; sending workers home early when sales are slow; and shifting hours significantly from week to week. Those practices have been common at Starbucks, and many other chains use even more severe methods, such as requiring workers to have 'open availability,' or be able to work anytime they are needed, or to stay 'on call,' meaning they only find out that morning if they are needed."

    The story goes on to say that "Starbucks prides itself on progressive labor practices, such as offering health benefits and stock. But its goals — treating workers well and making profits — are in tension. Baristas across the country say that their actual working conditions vary wildly, and that the company often fails to live up to its professed ideals, by refusing to offer any guaranteed hours to part-time workers and keeping many workers’ pay at minimum wage."
    KC's View:
    It is a shame that it took a Times article to make this happen.

    I also think that this story illustrates the continuing pressure, even in progressive companies such as Starbucks, to make numbers on a week by week basis. The desire to be efficient often outstrips the importance of being effective, and companies have to be very careful about that.

    Published on: August 15, 2014

    Yesterday, it was Target saying that it is hoping to improve the performance of its relatively new Canadian business by revamping and expanding its product selection. Now, Global News reports, Walmart Canada "is throwing half a billion dollars at expanding hundreds of locations into 'supercentres' this year that offer a full complement of groceries on top of the thousands of products it already sells."

    The story goes on to say that "Walmart didn’t specify whether the cuts were on food products or on general merchandise, but experts say it was likely a blend of both."

    And, the story says, "The country’s biggest supermarket operator, Loblaw, said late last month prices continue to fall on dry good items like cereal, crackers and cookies (though fresh foods like meat and produce are rising sharply). It’s a battle that’s only intensified as Walmart has rolled out more supercentres."
    KC's View:

    Published on: August 15, 2014

    From the continuing soap opera known as Market Basket…

    • The Boston Globe reports that Market Basket's co-CEOs, Felicia Thornton and James Gooch, have instructed store managers "to remove posters and other signs supportive of the reinstatement of Arthur T. Demoulas and an ongoing customer boycott."

    According to the story, "Market Basket stores have worn signage in support of ousted CEO Arthur T. Demoulas since his June firing, and have seen significantly more signs pop up inside and outside stores since a worker and customer movement for his reinstatement began in earnest in mid-July. Customers have also taped receipts from other grocery stores on store doors in order to show the effect of their boycott during the past several weeks. Many customers are boycotting Market Basket.

    "The email from the co-CEOs also asked that all signage asking for donations to workers who are going unpaid during ongoing protests also be taken down, and asked that 'items that are blocking docks or preventing load deliveries' be removed.

    • The Salem Patch reports that when Massachusetts Gov. Deval Patrick said this week that he believed that Market Basket employees should go back to work while the two sides of the Demoulas family negotiate a possible sale of the 50.5 percent of the company controlled by Arthur S. Demoulas to the faction controlled by Arthur T. Demoulas, he may have had an ulterior motive.

    Patrick's wife, Diane, reportedly works for a law form that is representing the independent members of Market Basket's board of directors, who to this point have been aligned with Arthur S. Demoulas.

    Gov. Patrick said he filed a "disclosure of an appearance of conflict of interest" out of an "abundance of caution," and that his wife's employment had nothing to do with his stated opinion on what the employees should do.

    Just to make sure we're all on the same page …The longtime family feud boiled over with the move by Arthur S. Demoulas, to oust CEO Arthur T. Demoulas 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. The family feud has been exacerbated by mass protests organized by employees and store boycotts organized by customers, as well as a systematic slowdown in deliveries by warehouse employees that has left many units virtually empty of product.
    KC's View:
    Whether his wife's employment influenced his opinion or not, Gov. Patrick's should have kept quiet on this issue. The fact is that much of the leverage that Arthur T. Demoulas has at this moment is directly related to the fact that employees continue to protest and customers continue to boycott the chain. Things go back to any semblance of normal, and he loses all that leverage, and there's almost no way to regain momentum. And I don't believe that, given a choice, the current board would sell the company to Arthur T. Demoulas if they can sell it to someone else.

    Published on: August 15, 2014

    Fox News reports that "employees at a 24-hour Walmart in Texas were shocked to find a teenage boy who apparently called the store home for four days without being noticed."

    According to the story, "Police said the unidentified teen made a hole in a wall of a drink aisle to take items without being noticed and used diapers to avoid having to use the restroom."

    Fox News adds that "Child Protective Services said the boy, who lives with relatives, was visiting other family members when he disappeared. Police released the boy to his relatives and said there’s no indication Walmart plans to file charges."
    KC's View:
    Two questions.

    How bad must things have been at home that this kid would rather wear diapers than be there?

    And how bad must things be at this particular Walmart that employees did not notice this for four days? This is almost impossible to imagine…

    Published on: August 15, 2014

    • The Cleveland Plain Dealer reports that this week, independent retailers Jeff and Tom Heinen opened their 20th store - in Bannockburn, Illinois, a suburb of Chicago. The store is the company's third in the region and second new store this year.

    The new Heinen's is in a former Dominick's location, and is described as "elegant and very tastefully done, with very high-quality materials."

    • The BBC reports that "Chiquita has rejected a takeover bid by Brazil's Cutrale and Safra groups, saying it was sticking to its plan to merge with European fruit seller Fyffes … A Chiquita-Fyffes merger would create the world's largest banana supplier, with $4.6 billion in annual revenues."

    • The Coca-Cola Co. said yesterday that it is acquiring a 16.7 percent stake in Monster Beverage, the energy drink company, for $2.15 billion.
    KC's View:

    Published on: August 15, 2014

    Regarding Amazon, MNB reader Danny Silverman wrote:

    Today’s views appear to have a consistent theme: people who STILL don’t get Amazon.

    Amazon is NOT a retailer. They are a technology platform first and a fulfillment engine second. It happens that retail is the closest industry that matches to the output of those two functions, but they are NOT a retailer!

    “The Walmart pricing model is so much better than Amazon.   Category margin goals are set and all products marked up to the margin goal (pre-price comparison).”
    Better for whom? Certainly not the customer, and that is the ONLY thing Amazon focuses on. We went through the era where brands had the power. Then we went through the era where the retailers had the power. Now, finally, it’s the shopper. And that is what has brands and retailers alike freaked out – Amazon has handed power to the shopper.
    “I do not claim to understand the economics of the publishing business but it appears to me that Amazon is attempting to make more money selling books than the publisher does in publishing them.  The entire weight of risk falls on the publisher.” Wrong. In the e-book economy, the publisher has no role whatsoever. It’s added cost to the system that Amazon is looking to remove and pass on to the shopper. Publish your book online and allow the shopper/reader community to vote up or down the quality based on the book’s merits, and utilizing the ratings and reviews system. Publishers are irrelevant. Resistance is futile.

    “If there is one is one lesson e-commerce merchants should draw from Brick and mortar retailing, it is that defaulting to lowest price as the primary component of a competitive position is a risky choice. By definition, there is only one lowest price and there is no guarantee any retailer can always occupy that position...They are missing a huge opportunity to create more collaborative relationships with suppliers.” If there is one lesson brands need to learn, it’s that product supply control has become their #1 priority in the age of eCommerce. Control your sales, control your discounts, control your reverse distribution. If done successfully (think Apple), the lowest price discussion is irrelevant and everyone sells not based on lowest price but on the buying and fulfillment experience, be it in store or online. Amazon doesn’t care about collaborative relationships with suppliers – it’s an inefficient use of their time that could otherwise be spent on improving the shopper experience.

    I agree with much of what you say. Except … I'm not sure that not stocking products made by manufacturers with which Amazon has a pricing dispute is the best way for "the everything store" to create an optimum shopper experience. And I think that Amazon has made it more about price and less about the experience, which could be a mistake.

    MNB user Wendell Ponder wrote, about another Amazon-related subject:

    You wrote, "Which essentially means that once I pay Amazon for the privilege of Prime membership, to get me products faster, they're willing to then pay me to get my products slower?"

    Kevin, I was tempted to write an email and call you a numbnut when you originally wondered why Amazon would provide this option; but then I told myself: "Relax, he's not all that bad; there must be an angle you are not grasping."  Well I relaxed and thought about it, and concluded you are a numbnut.  Look if I need a thumb drive to save a bunch of photos a relative is going to show me tonight, then I want to receive it today.  On the other hand, my order for bath soap and toilet paper, ship it sometime within a week; and I save a little money.  

    That's how I approach life and commerce.  Of course, there's no obligation for you to take the same approach; but you should be able to see that it is a sensible option for Amazon to offer for those who do.

    I've been called worse. (Sometimes by people who love me.)

    I just think this speaks to dueling priorities at Amazon, which we're seeing played out in a number of areas, and not always to Amazon's advantage.

    Following up on my piece about the new James Beard Public Market in Portland, one MNB user wrote:

    Kevin, my last trip to the Pacific Northwest about 3 years ago included visits to Pike Place Market and Grandville Island in Seattle and Vancouver, respectively.  At that time, I was wondering why Portland didn’t have something similar.  I’ve also been to the Reading Market in Philly but feel that is almost as much a big food court as a food market.  Too many “to eat” vendors versus sellers of food to prepare, but it is still worth a visit.  But my favorite market is the Jean Talon Market in Montreal.  Awesome.  The fruit and veggie vendors often have these plates on sticks elevated above the goods with freshly cut samples (see attached picture).  You can get some prepared foods there but it is mostly fresh produce, fresh veggies, meat, fish, cheese, bread…….and a store that sells only beers from Quebec (I never knew you could fill a whole store with such).

    Sounds wonderful.

    Regarding the Lands' End/GQ kerfuffle, one MNB reader wrote:

    Always amazed by those who protest on behalf of “the children.” A convenient, all-purpose way to defend censorship, while in reality the children are far more advanced and far less “disturbed” than we think.  Still, Land’s End is on everyone’s mind this morning, which wouldn’t have been the case if they’d done things the way they always had.

    And, responding to the Lauren Bacall film clips to which I linked this week, MNB reader Monte Stowell wrote:

    Wow, they just don’t make movies like they used to. I am still cleaning the steam off my glasses. Hot-Hot-Hot! Thanks for sharing these video clips, they brought back some good memories of when I first saw them.

    My pleasure.
    KC's View:

    Published on: August 15, 2014

    Been a great week … and I have to tell you that one of the highlights was spending Wednesday afternoon at AT&T Park in San Francisco, enjoying a 7-1 Giants win over the White Sox, and enjoying the wonderful company of Safeway's Larree Renda and Brian Dowling. I had offered to pick up tickets, but they said that they'd take care of it … and I'm glad they did, because the only way we would have had better seats would have been if we'd been in the dugout. (That picture of us at left is where we sat!)

    It was a reminder - served up with afternoon baseball, hot dogs and beer - of how lucky I've been to make friends like these over the years, and how I should never take them for granted.

    Speaking of friends … I got a reminder this week of how Facebook has changed our lives for the better when I had lunch in the Napa Valley with someone I had not seen since 1976.

    My friend, Adrianne Jaski, was someone I knew through an aunt and uncle who lived in Livermore, California. (Her mom had been raised with my dad, and my aunt kept in touch over the years and miles.) The last time I saw Adrianne was while we were both still in college, but Facebook had enabled us to re-establish connections. This week, when I was in Northern California for a speech, I detoured to Yountville for what ended up being an utterly delightful lunch with Adrianne and her husband at a fabulous restaurant called Bottega, where I enjoyed a fabulous risotto made with pork jowls and peas, and a beautifully smooth 2010 Renteria Pinot Noir.

    Thank you, Mark Zuckerberg. (And thank you, Adrianne, who worked a lot harder at this than I did.)

    Thirty-five years ago today, Apocalypse Now was released … and what I find amazing about that is that I can specifically recall when and where I saw it for the first time - it was the Ziegfeld Theater in Manhattan, I waited on line for several hours to get in, and the movie began with The Doors singing "The End" as a forest in Vietnam is napalmed…the sound of the helicopters moved across the screen and the theater…and we were quickly exposed to Francis Ford Coppola's vision of hell. And then, the blades of the helicopters turned into the blades of the ceiling fan, and we found ourselves with Captain Willard (Martin Sheen), who, we quickly discovered, is in his own personal hell. They may be three or four of the most remarkable opening minutes of any film, ever … and I remember seeing them the first time as if it were yesterday.

    And it was 35 years ago. Yikes.

    I was thinking about Apocalypse Now this week when I was in San Francisco, and I went to Coppola's Cafe Zoetrope on Kearny Street there, a little Italian bar and restaurant that I've always loved. When I went, I had what I always have - the Chilaquiles, which is not Italian but is delicious, made from crispy tortillas, scrambled eggs, tomatillo sauce and melted cheese. I'm told that the only reason it is on the menu is that Coppola loves them, and that is at least one thing we have in common.

    I washed the Chilaquiles down with the 2008 FC Reserve Viognier, which was amazing.

    It doesn't get as much attention as TV series such as "Mad Men" and "The Walking Dead" and "Orange Is The New Black" or "Downton Abbey," but I have to say that have found "Longmire," on A&E, to be fascinating television, based on a series of novels (that I have not read) by Craig Johnson.

    The series focuses on Walt Longmire, a modern day Wyoming sheriff who deals with local crimes while recovering from the death of his wife. There is all sorts of fascinating subtext, and the show also examines the tense relationships between the white population and local native American communities. Robert Taylor, as Australian actor best known for his role in , is impressive and taciturn as Longmire, and he's ably supported by a cast that includes Lou Diamond Phillips, Katee Sackhoff, Cassidy Freeman and Gerald McRaney. I love westerns, and this is a good one … worth catching up with on iTunes, On Demand, or whatever.

    Last, but hardly least, I spent last weekend attending two weddings in New Jersey - for the same couple, Caitlyn and Shankar. They got married twice because Shankar is Hindu, and Friday night's ceremony was for his religion, while Caitlyn is Catholic, and Saturday's afternoon's ceremony was in a church.

    I've been to Catholic weddings before, but never a Hindu ceremony, and I have to tell you that it was a remarkable event - lasting almost three hours long, packed with relatives who eat and talk and celebrate throughout the ceremony, and there is an organic nature to the whole thing. The food was amazing - all vegetarian, all spicy, all delicious.

    And then, on Saturday night, there was the party - which consisted mostly of Italians and Trinidadians getting together for six of the most exhausting hours that I've ever spent. It was extraordinary … because let me tell you, these folks know how to party! And there was a very special melding of cultures that I found to be both energizing and, somehow, reassuring.

    That's it for this week…Have a great weekend, and I'll see you Monday.


    KC's View:

    Published on: August 15, 2014

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    KC's View: