retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: September 8, 2014

    by Kevin Coupe

    You may remember that in May 2011, our very own Michael Sansolo wrote a column in which he extolled the advantages of using a travel agent, suggesting that even in a time when more and more people use online travel services, a great agent can make travel - these days, often a dispiriting experience - easier. Or at least less complicateI.

    (Michael's original column can be found here.)

    I completely agree with Michael on this one … not least because we share the same travel agent. In fact, if memory serves, I'm the one who referred Michael to Gary Brooks of Protravel, who has been making my life considerably easier for more than a dozen years.

    It appears, if one is to believe the Los Angeles Times, that perhaps the rest of the world is catching up with us.

    According to the Times, "Although online travel websites like Orbitz and Travelocity are now responsible about 70% of travel booking in the U.S., the folks who work out of brick-and-mortar travel agencies are reporting booming sales … Travel agents say revenues, bookings and the total number of clients are up in the first half of 2014 compared with the same period last year, according to a survey by the American Society of Travel Agents, which represents nearly 6,000 travel agents across the country … Of the agents questioned in the survey, 47% reported higher revenue, with 27% saying revenue has remained about the same as last year. Also, 45% reported more transactions this year, with 30% saying business has been about the same."

    Now, I'm not surprised that revenue is up, since travel costs are up … but it says a lot that the number of transactions are up as well.

    And it is worth repeating a point that Michael made back in 2011 - the value that travel agents continue to provide to their clients, and apparently seem to providing with greater frequency and with greater success, is a good model for any retailer doing battle with online competitors. They are able to find inexpensive and budget alternatives, but they also do so within the context of what their customers need, based on a knowledge of their preferences and exigent circumstances.

    And if you continue to do it, over and over, you get good word of mouth, a growing customer base, and expanded sales.

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

    Published on: September 8, 2014

    The Arkansas Democrat-Gazette reports that Walmart has decided to rebrand all of its Express stores, converting them to mini-Neighborhood Markets. The Express moniker will be eliminated, the story says, with all new small stores in the future called Neighborhood Markets, and the 21 existing Express stores converted to the Neighborhood Market banner in coming months.

    According to the story, Judith McKenna, chief development officer for Wal-Mart U.S., said in an internal company memo last week that "Wal-Mart's research into customers' habits showed that its small Express stores were serving the same purpose as its larger Neighborhood Market stores … While testing the Express format, the company learned that customers rely mostly on the stores for grocery fill-in trips, last-minute dinners and prescription pickups, McKenna said. It's the same with the Neighborhood Market."
    KC's View:
    It seems to me that one of the issues that this decision illustrates is that Walmart never really had a specific vision for the small-store Express format, which is sort of what I've been saying from the first time I saw one - they always struck me as small boxes into which Walmart tried to jam as much stuff as it could, and that the company never really was able to define the attributes that would differentiate them. It was as if the Express stores existed because the Walmart thought it needed small stores, believed that the public markets would reward it for having them, but couldn't really figure out what they were.

    But just changing the name doesn't solve the basic problem. Sure, maybe spreading the Neighborhood Market name more widely will allow it to take advantage of certain synergies realize some cost savings, but it isn't like 'Walmart Neighborhood Market" is a concept that has universal name and format recognition.

    I still believe that whatever banner is hung over the front door, Walmart still needs to figure out what its small stores are, how they are going to be differentiated, and how those advantages and differences will be effectively communicated to its target shoppers.

    "A rose by any other name would smell as sweet," William Shakespeare wrote in "Romeo and Juliet." The same goes for Walmart Express - the name may change, but the stores themselves will still stink.

    Published on: September 8, 2014

    Whole Foods and Instacart, the personal grocery shopping-and-delivery service, have announced what they are calling "a new partnership that enables customers to have Whole Foods Market products delivered in as little as one hour. Customers will soon also have the convenient option to place orders via Instacart and pick up their order at a local participating Whole Foods Market store."

    The announcement goes on to say that "the two companies will pilot the in-store pickup option at select Austin and Boston stores in the next month. Instacart delivers from Whole Foods Market in all of the 15 cities it currently serves: Atlanta; Austin; Boston; Boulder; Chicago; Denver; Houston; Los Angeles; New York City; Philadelphia; Portland, Oregon; San Francisco; San Jose; Seattle and Washington, DC. In the coming months, Instacart and Whole Foods Market expect to expand the in-store pickup option to all of the cities Instacart serves."

    The process will work like this: "By ordering at or via the Instacart mobile app, Whole Foods Market customers simply select their zip code, add items to a virtual cart, and then choose a delivery window (within one hour, within two hours, or at a scheduled time) and check out. Instacart Personal Shoppers confirm incoming orders on their smartphones, shop for the items at Whole Foods Market stores, and then deliver orders to customers in the designated delivery timeframe … All Instacart customers receive free delivery on their first order; thereafter, the cost is just $3.99 for two-hour delivery or $5.99 for one-hour delivery. Customers can also purchase a $99 annual Instacart Express membership and receive free delivery on any order over $35."
    KC's View:
    There was one line in the announcement that really grabbed my attention…

    Through its partnership with Instacart, Whole Foods Market can offer its customers the convenience of delivery without having to handle the logistics themselves.

    This reminds me of how, years ago, there were food retailers who thought that by working with Priceline - which had created a "name your own price for groceries" program - they could avoid actually having to get down in the details of e-commerce themselves. They were wrong, of course - Priceline's grocery concept was one of the dumbest marketing schemes ever conceived, and it quickly failed. And those retailers had to find another solution, and actually had to take ownership.

    I get that Instacart seems to be on a roll. I get that Whole Foods sees it as a way of outsourcing the entire e-commerce experience. But I think this is a huge mistake … because it leaves the creation of a cohesive, brand-consistent online shopping experience too much in the hands of other people.

    You can outsource certain portions of an online strategy, but the minute a company starts to think it can avoid all the logistical issues, it starts to go down a road with a ton of potholes. I think this could be a potentially big mistake for Whole Foods.

    (BTW … I think it is a really good idea for Instacart, because it just made a deal that will drive up the price when, inevitably, it goes through an IPO or sells the business to someone else. Because that is its primary goal, not taking care of Whole Foods' customers…)

    Published on: September 8, 2014

    Interesting piece in the Wall Street Journal about David Friedberg, an entrepreneur and former Google executive who now works overseeing Monsanto's "precision agriculture" services that it sells to farmers.

    "The lifelong vegetarian has also emerged as an unlikely champion of Monsanto at a time when the company - and the business of genetically engineering crops that it pioneered - face intensifying attacks," the Journal writes, noting that his "Silicon Valley pedigree helps him advocate for Monsanto in a region that helped to cultivate the organic food movement and to launch California's 2012 ballot initiative to require GMO food labeling - an effort that failed, but generated the 'March Against Monsanto' crusade. Genetically modified seeds, in Mr. Friedberg's view, enable farmers to grow larger crops with less resources and represent a way to help sustain the growing world population."

    Brett Begemann, Monsanto's president, tells the Journal that Friedberg's hiring reflects a sense that the company was "absent from the conversation For years we had viewed ourselves as a company that helps farmers increase their productivity, and food companies were the ones that took the product to the consumer."

    You can read the entire story here.
    KC's View:
    I guess I have a little problem with the statement made by Monsanto's Begemann, that the company has "nothing to hide," suggesting that the problem is all optics, not a genuine difference of opinion about a legitimate issue.

    And I know I have a problem with Friedberg's comment that some of the resistance to Monsanto's business comes from critics who "want to live in a natural world where we're all living in treehouses in the rainforest and picking coconuts out of the tree. Maybe it would be possible if we had 100,000 people living on earth, but that's not the reality that we're living in today."

    There can be a rationale for the use of GMOs. There certainly is a rationale for people who say they'd rather avoid them. What there is no rationale for, OMHO, is spending millions of dollars to defeat any and all efforts to require labeling … unless, of course, you have something to hide.

    Published on: September 8, 2014

    Reuters reports that Family Dollar has rejected Dollar General's "sweetened" bid to buy it for $9.1 billion, saying that the offer did not sufficiently address concerns that antitrust regulators might torpedo a deal.

    The story suggests that the rejection increases the likelihood that Dollar General could "go hostile" with its efforts to buy Family Dollar, which has said that it would rather ago through with the $8.5 billion bid that it has accepted from Dollar Tree.

    Dollar General said last week, when increasing its offer for Family Dollar, that it was pledging to pay a reverse termination fee of $500 million of their merger falls apart because of antitrust issues, and said it would be willing to more than double the number of stores it would be willing to divest because of antitrust issues to 1,500.
    KC's View:

    Published on: September 8, 2014

    The Chicago Tribune reports that daily deal purveyor Groupon has come up with a new concept for restaurants - allowing them to specify in deals sold to consumers the times during which they can use their Groupons.

    The idea is that restaurants offering Groupons often do so to build traffic at times when they are slow, not on, say, Saturday night at 7 pm. So, people who buy the Groupons will be limited to less-busy times.

    At the Frontera Grill in Chicago, for example, where the program was tested, "Fifty-eight people used Frontera's Groupon during the pilot period, with 85 percent ages 22 to 35. The average amount spent in addition to the Groupon coupon was $38.89, and seven of 29 tables spent more than $69 on additional food and drinks. Overall, Frontera said, the Groupon deal generated $1,626.93 in revenue on tables that would have otherwise been empty during 10 days over a two-week period."

    The Tribune writes that "by the end of the year, Groupon plans to roll out the model to several other 'time-based' businesses, including salons, spas and businesses that offer classes or activities."
    KC's View:
    Very smart. This is how Groupon and its ilk should be used … to build traffic and sales at slow times. The more targeting mechanisms can be used, the more effective these kinds of programs will a) be successful and b) be sustainable.

    Published on: September 8, 2014

    Reuters reports that "regulators in India are investigating whether Inc may have circumvented restrictions placed on foreign investors by selling directly to domestic consumers … India does not allow foreign firms to own majority stakes in retail companies that sell more than one brand. is allowed to operate there because it acts as a marketplace rather than a retailer."

    Amazon has said it plans to invest $2 billion more in India, where, as the story says, it has "slashed prices, ramped up marketing and accelerated warehouse construction to try and take on local competitors."
    KC's View:

    Published on: September 8, 2014

    • The Wall Street Journal reports that second-round bids for Grocery Outlet Inc., which has more than 200 units, are due next week, "in a sale that could fetch upwards of $1.2 billion for Grocery Outlet’s owners, according to people familiar with the matter. Based on a typical private-equity auction timetable, that could mean this one will be resolved this month or next."

    The story says that "private-equity firms Bain Capital LLC, Hellman & Friedman LLC, Advent International Corp. and Roark Capital Group submitted first-round bids in excess of $1.1 billion … There are no corporate bidders involved in the process."

    • The Wall Street Journal reports that Kroger is saying it plans "to hire an additional 20,000 permanent employees to staff its stores as the nation's largest independent grocery chain accelerates its expansion.

    "Kroger didn't give an exact time frame for the hiring, saying only it plans to fill the jobs as soon as possible—part of an expansion strategy announced in 2012. Kroger, which currently has 2,640 grocery stores, has added 40,000 jobs over the past six years."

    • The Bergen Record reports that John R. Moritz, the former senior vice president of marketing for the Great Atlantic & Pacific Tea Co. (A&P) who has pleaded guilty to defrauding the company of more than $1.2 million, has been sentenced to three years in prison and compelled to make $3.2 million in restitution, of which he already has paid back $1.2 million.

    • The BBC reports that the Coca-Cola Co. has agreed to adopt "government recommendations and introduce traffic light nutrition labels on the front of its cans and bottles," an initiative that it previously had rejected.

    The story notes that "the colour-coded labels will show nutritional content in each container and percentage guidelines for daily consumption of fat, saturated fat, salt, sugar and calories," that Coke changed its mind after gauging the reactions of shoppers to the program.

    Crain's Chicago Business reports that McDonald's is encountering an unexpected problem as it tries to recapture sales momentum that it has lost in recent years - millenniums are shunning its food because they perceive it to be unhealthy, and that distaste is being transferred to their children: "Raised in a country where ethnic food often is commonplace and bombarded with anti-processed-food messages, kids no longer crave McDonald's like they used to."
    KC's View:

    Published on: September 8, 2014

    • The Associated Press is reporting this morning that S. Truett Cathy, founder of the Chick-fil-A restaurant chain, has passed away at age 93.

    Cathy opened his first Chick-fil-A restaurant in Atlanta in 1967, and the chain has now grown to more than 1,800 units in 39 states, doing annual sales of more than $5 billion.

    The company has become noteworthy for conservative religious views most reflected by the fact that all of its units are closed on Sundays; Cathy's son, Dan Cathy, created a controversy of sorts in 2012 when he said that the chain supported "the biblical definition of a family," which caused some people to boycott the chain and others to actively patronize it.

    Cathy, according to the story, has an contract with his children that allows them to sell the company but never to take it public.
    KC's View:

    Published on: September 8, 2014

    On the subject of data breaches, one MNB user wrote:

    Your comments regarding the data breach and the trend that state sponsored elements seem to be rising to the top is right on the money.

    This is the next extension of incursions and it's a real threat that is worthy of a Homeland Security type of resourcing and response. Frankly its a type of war on the cyber side that will continue to expand. Private companies are all trying to individually keep up and we need to win collectively from a resourcing and expertise standpoint.

    You mentioned Putin in your comments. No question it's a good example of a state that is letting this run wild and is probably, in fact, encouraged/supported directly. Without trying to sound to dramatic---it's a clear and present danger.

    From another reader:

    If it is true (and, it probably is) that the “bad guys” are faster than the “good guys”, maybe we need to take a hard look at the basic concept of the system itself. Maybe we should go back to paying for more of our things by check – yes, hardcopy. For us baby boomers, we did it before, we can do it again. For the younger folks, it might seem very backward. But it does not seem that there will ever be a real way to get ahead of the hackers. Thus, all of us common folks will always be at risk – at the mercy of the hackers and retailer upper management commitment to data security…

    On another subject, one MNB user wrote:

    Thanks so much for including the link to the Aspen Ideas Festival. Fascinating discussion which left me impressed with Dave Dillon.


    For those of you who may have missed it, the video was of an panel discussion at the Aspen Ideas Festival focusing on "Values at Work: Linking Purpose, Productivity, and Performance."

    You can watch it here.
    KC's View:

    Published on: September 8, 2014

    It is Week One in the National Football League…

    Washington 6
    Houston 17

    Tennessee 26
    Kansas City 10

    New England 20
    Miami 33

    Oakland 14
    NY Jets 19

    Jacksonville 17
    Philadelphia 34

    Cleveland 27
    Pittsburgh 30

    Minnesota 34
    St. Louis 6

    Buffalo 23
    Chicago 20

    Cincinnati 23
    Baltimore 16

    New Orleans 34
    Atlanta 37

    Carolina 20
    Tampa Bay 14

    San Francisco 28
    Dallas 17

    Indianapolis 24
    Denver 31

    And, in the US Open Women's Singles finals, Serena Williams defeated Caroline Wozniacki 6-3, 6-4 to win her sixth US Open singles title and her 18th Grand Slam singles title. This ties her with Chris Evert and Martina Navratilova for Grand Slam wins, with only Steffi Graf - who won 22 - in front of her.
    KC's View: