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    Published on: November 19, 2014

    by Kevin Coupe

    Just FYI … 13 years ago this morning, I wrote the first MNB.

    Longest job I've ever had. (Probably because it doesn't feel like a job.) Going to be doing it for awhile longer, mostly because, as they say, I want to keep doing it until I get it right.

    So let me take this moment to say thank you to the almost 30,000 MNB subscribers who form a community that I'm grateful to be part of. And thank you to all the MNB sponsors over the years that make it all possible - among them MyWebGrocer, Invatron, Barnie's CoffeeKitchen, Park City Group, and Samuel J. Associates. I couldn't do it without their support.

    Now, back to work….
    KC's View:

    Published on: November 19, 2014

    by Kevin Coupe

    "Fresh Talk" is sponsored by Invatron: Proven Technology.  Innovative Thinking.  Intelligent Solutions for Fresh.

    Content Guy's Note: "Fresh Talk" is an MNB feature that alternates on Wednesdays with "Kate's Take."  It will examine all aspects of "fresh," in both the broadest and most focused meaning of that term (depending on the whims of the columnist). "Fresh Talk" is sponsored by Invatron...which you can learn more about here…but which has no input into the subjects covered or responsibility for the attitudes taken.

    There is a long piece on the Washington Post website about the 18,000 square foot store that Whole Foods plans to open in the Englewood section of Chicago, described as a "desolate stretch of city" that has, over the past few decades, gone into a stead spiral of decline, losing the local and chain retailers that once dotted its corners.

    According to the story, "The grocer, which has built its fortunes and reputation anchoring condo developments in wealthy enclaves, has never gone into a neighborhood like this. But last year, to the disbelief of many, the company announced plans to open a store in 2016 here, in one of Chicago’s most economically depressed neighborhoods … This store, though, is no act of philanthropy. Nor is it a bet, by Whole Foods, on neighborhood change. The arrival of its gleaming stores in a neighborhood often signals the influx of wealthier residents. But that is not likely to happen in Englewood, at least not any time soon. Whole Foods is planning to sell olive oil and snap peas to the people who live here now. It is also planning, in the process, to make money."

    The Post goers on to suggest that "Whole Foods is gambling that it can tailor its high-priced brand to a low-income market. It’s gambling that it can create customers out of people who out of necessity have long shopped at corner stores and Save-A-Lot. It’s gambling that it may even change what some of them eat."

    What's interesting about the story and its description of what Whole Foods says it is trying to do in Chicago is that they seem to be focused on offering an authentic Whole Foods experience - when they've suggested that the store could have a greater focus on lower-cost private label products than other stores, the notion has been rejected. People seem to want an actual Whole Foods, even as they acknowledge that pricing will have to be adjusted if the store is to have any chance of succeeding. And people have to be careful about describing the store as "a socioeconomic experiment," as the Chicago Tribune did in a recent article - because the people living in the neighborhood don't think of themselves that way, and don;t want to see themselves described that way. They're not an experiment … this is their lives.

    If you're interested in the details, you can read the entire story here.

    One point seems clear. To make this store work, Whole Foods may have to be as disciplined as it ever has been. It is going to have to manage its inventory - fresh and otherwise - extremely carefully, keyed to the demands and requirements of the local population.

    As the Post writes, "Whole Foods has never closed one of its stores," and leadership doesn't intend this one to be the first: "If anyone is motivated to make this store viable, it’s Whole Foods, precisely because it’s coming into the neighborhood to run a business, not a charity. And it has signed a long-term lease."




    Published on: November 19, 2014

    In the UK, the Guardian reports that Container Store co-founder Garrett Boone's latest retail concept, TreeHouse - described as "a home improvement retailer that would focus on sustainable, environmentally friendly, energy-efficient products" - seems finally to be getting traction.

    The concept was first conceived in 2009, the first and only store was opened in Austin, Texas, in 2011. Second-year sales were up 25 percent over the first year of operation, and sales were up third year by 75 percent.

    The Guardian writes that "like The Container Store, TreeHouse is attempting to transform the market by giving the general public access to a wider array of products." And, "TreeHouse’s biggest challenge is similar to the one that The Container Store faced in 1978. Like the storage retailer, it’s building a new market that consumers may not completely understand. Currently, customers interested in reducing their electric bill or cutting their carbon footprint are faced with a baffling array of products and options, some of which are outstanding – and many of which are not.

    "To make matters worse, if customers want accurate, up-to-date information on sustainable products, they usually have to do a lot of research on their own. That combination of limited access and a dearth of information creates hurdles that turn many consumers off."

    One of the solutions that TreeHouse has developed is curation.

    “We’re making pre-decisions,” Boone tells the paper. “We’re giving customers three choices instead of 10.” TreeHouse categories items as “better, best or exceptional” and tries to offer "a balance between price and performance that customers can easily decipher. Another part of TreeHouse’s careful curation lies in its interior design. The store carries most of the items that one would expect of a home improvement store, but organizes them very differently. Rather than arranging its products by function – plumbing, painting, carpentry and so forth – TreeHouse divides most of them into either 'design' or 'performance'."

    Within two decades, Boone says, the goal is to have a TreeHouse store in every major US market.
    KC's View:
    I'm one of the least DIY-type guys around, but I have to say that I'm fascinated by this concept, especially the notion of grouping products in a different way and stressing the importance of consumer education. It sounds like it could be the kind of concept that, if it gets real traction, could have impact even beyond the DIY business.

    You should check out the company's site, here. It is kind of cool.

    One other thought. While this is a DIY concept, I wonder if they would be well-served to have handyman-type people on call who could serve as advisors/consultants to people like me, who have trouble doing anything beyond screwing in lightbulbs. It might cost a little more, but the long-term savings could make it worthwhile.

    Published on: November 19, 2014

    The Washington Post reports that the family of reggae icon Bob Marley has announced that " it plans to piggyback on successful efforts to legalize marijuana in the United States and elsewhere by introducing a new brand of marijuana products bearing the late singer’s name.
    'Marley Natural' is being launched by Privateer Holdings, a cannabis industry investment firm, and products will reach the market in late 2015."

    According to the story, "It will offer organically grown heirloom Jamaican marijuana strains, in keeping with Marley’s preference for high-quality marijuana grown without the use of fertilizer. And it will be available in jurisdictions that allow recreational or medicinal marijuana sales. The brand also plans to offer cannabis- and hemp-infused products such as lotions and sun-repair creams. Marley reportedly smoked as much as a pound of marijuana per week. But at the time of his intense fame in the United States and around the world, he was viewed as a nonconformist symbol."

    "My dad would be so happy to see people understanding the healing power of the herb,” Cedella Marley, the singer's daughter, said in a prepared statement. “He viewed the herb as something spiritual that could awaken our well-being, deepen our reflection, connect us to nature and liberate our creativity … Marley Natural is an authentic way to honor his legacy by adding his voice to the conversation about cannabis and helping end the social harms caused by prohibition."
    KC's View:
    Branding genius. Even better than was suggested by the report earlier this year that Jimmy Buffett's Margaritaville Enterprises was looking to trademark "Coral Reefer" for a possible brand extension.

    Published on: November 19, 2014

    The Washington Post reports that on the day that the two sides met in court for a pretrial session, attorneys for comedian Tracy Morgan ("30 Rock," "Saturday Night Live") said that he continues to suffer from a traumatic brain injury caused when his limo bus was hit by a Walmart truck on the New Jersey Turnpike last June.

    “He’s fighting to get better, and if there’s a chance for him to be back to the Tracy Morgan he once was, he’s going to try to do that,” said Benedict Morelli, Morgan’s attorney. “But we just don’t know because of the severity of the injuries that he sustained and the fact that he had such a severe brain injury.”

    The crash killed comedy writer James McNair. It was caused when a Walmart-owned truck, driven by a Walmart driver at a speed 20 miles over the speed limit on the NJ Turnpike, plowed into Morgan's car and five others last summer. The truck driver, Kevin Roper, has pleaded not guilty to criminal charges that include vehicular homicide and assault by auto. Reports at the time said that Roper had been awake for 24 hours.

    The Post notes that "Morgan’s attorneys are seeking punitive and compensatory damages for his injuries, which Walmart claims were partly caused by the fact Morgan wasn’t wearing a seat belt."
    KC's View:
    It seems to me that the Walmart lawyers must be mostly concerned with limiting the financial damage as quickly as possible in this case - the facts to this point look pretty damning, the victim is high profile, and it does not look like the kind of case in which it will be able to use an army of lawyers and plethora of motions to drag things out. They probably should do their best to end this thing and get out of the headlines.

    But, when it is over, I hope that somehow it draws greater attention to truck safety on US highways.

    Published on: November 19, 2014

    Starbucks said yesterday that it has begun rolling out its Powermat wireless charging initiative, in some 200 stores in the San Francisco market.

    According to the story, "Stores in the San Francisco Bay area are now equipped with 'Powermat Spots' - designated areas on tables and counters where customers can place their compatible device and charge wirelessly.  In addition, Starbucks stores are offering Duracell Powermat 'Rings' for purchase or loan that instantly upgrade any phone to wireless charging compatibility. The rings are being offered for in-store purchase at $9.99 and can alternately be borrowed and returned on a per-visit basis."

    The strategic plan calls for Starbucks to roll the initiative out throughout the US, and explore the possibility in Asia and Europe.
    KC's View:
    Can't wait.

    Published on: November 19, 2014

    • The Huffington Post reports that "as they try to rally support for legislation aimed at improving low-wage jobs, Sen. Elizabeth Warren (D-Mass.) and Rep. George Miller (D-Calif.) invited members of the worker group OUR Walmart to Capitol Hill on Tuesday to brief Congress on working for the world’s largest retailer. At the forum held in a Senate office building, Warren and Miller made their case for a trio of labor-friendly bills that have so far failed to overcome Republican opposition: one that would raise the federal minimum wage, a second that would set rules for work schedules in the retail sector, and a third that would address the gender pay gap."

    The story goes on to say that "the invitation to members of OUR Walmart was seen as a rebuke by Democrats to the nation’s largest private-sector employer, long criticized for the wages paid to its store employees. OUR Walmart is backed by the United Food and Commercial Workers union, which has been trying to organize the retailers’ stores for years. The group has spearheaded the Black Friday strikes at Walmart stores that are expected to resume next week."
    KC's View:
    Hard to imagine that Warren and Miller will be able to do much beyond providing moral support to groups like OUR Walmart, at least for the foreseeable future. Time - and the balance of legislative power - is not on their side.

    Published on: November 19, 2014

    Folio reports that the US Postal Service (USPS) yesterday announced the resignation of Patrick Donahoe, who has served as Postmaster General and CEO of the money-losing institution since 2010. He will be succeeded by Megan Brennan, the USPS COO.

    The shift at the top came as the USPS said that it lost $5.5 billion during the 2014 fiscal year.

    According to the Folio story, "Bumping up the group's second-in-command and a long-time colleague of Donahoe's - they started working together on a local level in the 1990s - probably means things will continue as they have in recent years. That is, the USPS will keep trying to control costs, diversify revenue streams and lobby Congress for operational reforms."
    KC's View:
    I've been pretty hard on Donahoe and the USPS over the past few years, so let me say something nice for a change. I think that in recent months, as the USPS has expanded services - making Sunday deliveries and even getting into the food delivery business in selected markets - it has been doing exactly the right thing.

    One generally does not compete by getting insular and reducing products and services. No, you have to get better and you have to get more ambitious and aggressive. I have no idea if the USPS has long-term viability, but the short-term recent moves have been in the right direction.

    Published on: November 19, 2014

    The Washington Post reports that the world may be heading for a chocolate shortage.

    According to the story, "Chocolate deficits, whereby farmers produce less cocoa than the world eats, are becoming the norm. Already, we are in the midst of what could be the longest streak of consecutive chocolate deficits in more than 50 years. It also looks like deficits aren't just carrying over from year-to-year—the industry expects them to grow. Last year, the world ate roughly 70,000 metric tons more cocoa than it produced. By 2020 … that number could swell to 1 million metric tons, a more than 14-fold increase; by 2030, they think the deficit could reach 2 million metric tons."

    Part of the problem is supply - weather changes have caused a decrease in cocoa crops. And the rest of it is demand - more people eating more chocolate than ever.
    KC's View:
    Of course, it also is possible that this is just a story ginned up by chocolate product manufacturers looking to drive up demand and prices and get people to start hoarding. (Does the Halloween candy I stash in my freezer count as hoarding?)

    One of the things that is disturbing about the story is the industry contention that one way to address the problem is develop methods of growing cocoa that will be more resistant to weather issues, but could also make chocolate less intense and flavorful. "It's unclear anyone will mind a milder flavor if it keeps prices down," the Post writes. "And the industry certainly won't mind, so long as it keeps the potential for a gargantuan shortage at bay."

    If this happens, it may be just one more case where the culture has been willing to accept lowest-common-denominator product … which, in my view, just pushes us one step farther down the path toward the end of western civilization as we know it.

    Published on: November 19, 2014

    • The New York Post is quoting informed sources as saying that Dollar General may have to divest more than 4,000 stores if the Federal Trade Commission (FTC) decides to approve its hoped-for $9.1 billion acquisition of Family Dollar. Dollar General had said it would sell up to 1,500 stores to satisfy regulators, though it believed it would be required to sell fewer.

    Family Dollar continues to prefer an $8.5 billion offer from Dollar Tree that it believes will pass muster more easily with antitrust regulators and require fewer stores to be divested.


    • The Times of Trenton reports that Delhaize-owned Bottom Dollar Food "expects to lay off 460 employees at its 13 New Jersey supermarkets as it closes all of its stores following a sale to larger grocery chain Aldi. The layoffs are expected to take place before the end of the year, and result from the fact that Aldi stores tend to have fewer employees than Bottom Dollar units.

    It is likely that the layoff scenario will repeat itself throughout the markets where Bottom Dollar has been operating.


    • The Harris Poll is out with projections saying that "just over half of all Americans (51%) plan to purchase toys as gifts this year, nearly consistent with last year's intent (50%). Not surprisingly, parents of a child under the age of 18 are twice as likely to purchase toys as those without children under the age of 18 (82% vs. 41%, respectively)."

    The report goes on: "Just 18% of Americans who will purchase toys intend to spend more than they did in the previous year. This number has decreased steadily over the past three years (23% in 2012, 20% in 2013, & 18% in 2014). While nearly half of all toy purchasers (48%) plan to spend the same amount on toys as they did last year, nearly one-third (31%) plan to spend less. 
    Looking specifically at parents who plan to purchase toys, one-quarter (25%) intend to spend more on toys compared to last year; however, one-third (33%) intend to spend less."
    KC's View:

    Published on: November 19, 2014

    • The Wall Street Journal reports that Thomas Via, a former senior executive at the Babies R Us division of Toys R Us and a former executive at Wal-Mart Canada, Payless ShoeSource, and Kmart, has been hired as the new CEO at Brookstone.

    Via succeeds Steven Schwartz, the Brookstone CMO who has been serving as interim CEO since the resignation in September of James Speltz. Schwartz now returns to his CMO role.
    KC's View:

    Published on: November 19, 2014

    On the subject of Thanksgiving store openings, MNB reader Neil G. Reay wrote:

    Just a thought on the issues of store openings on Thanksgiving and extended holiday store hours: I never seem to see an announcement about stores opening on the holiday that includes a statement that the C-level executives, EVPs SVPs, VPs and AVPs will all be in the stores alongside the employees helping to provide the customer experience. Good enough to tell the minions to open the stores while the execs enjoy turkey and time off. After all, don’t they deserve it for their “brilliant” merchandising decisions? If it is important enough for the store to open on a holiday, it is important enough to have the execs there to help optimize the experience and to meet and talk with actual employees and customers.

    Agreed.

    MNB reader Ben Loy chimed in:

    Some Retailers Decide To Make A Virtue Out Of Being Closed On Thanksgiving … well it is a virtue and I will vote with my money to support the companies that choose to allow their employees to enjoy the Thanksgiving Holiday without having to worry about going to work. I may shop the on-line sites for these companies if I need/want to shop but I am glad to see that these companies have the courage to say No, to shopping on this holiday.

    Ah, but you've just put your finger on the reason people stay open on Thanksgiving - to compete with online stores that are open anyway.

    I'd rather see stores closed, too, but I'm not sure I'd cast it as a matter of virtue vs. vice. That strikes me as counter-productive.




    On the subject of Price Chopper converting its stores to the Market 32 concept, one MNB reader wrote:

    When I first read this report on Price Chopper I thought sure that it was drafted to be sent out on April 1st.  Then I was shocked to find out it was real.  I hope whoever thought this was a good idea has a strong resume.

    Another reader thought I've been inconsistent in my analysis:

    You really can't have it both ways; either labor is a cost, as you asserted when defending the Golubs, or it's an investment that compassionate leaders, such as Arthur T. DeMoulas recognize.

    The evidence as to which is more successful is fairly obvious.


    I'm not sure I'm trying to have it both ways, nor that I've been inconsistent … though I get your point.

    I think compassionate servant-leaders can treat employees as if they are an investment and still, if circumstances require it, engage in layoffs if that's what required to keep the company viable. It doesn't help to avoid layoffs if it puts the entire company and all of its employees at risk.




    On another subject, MNB reader Joe Davis wrote:

    I’m sure the quote “We’re not retreating; we are advancing in another direction” is uttered more than a few times at Amazon, and should serve as a warning more than a naïve jeer for competitors and suppliers alike.  If I were in a position where I felt like I was competing with Amazon rather than utilizing them, I would not breathe a sigh of relief each time I perceived them to stumble or fall short of a goal.  I suspect it is not perceived that way internally and, what’s worse, I should actually be more concerned about what Amazon learned in the process and will act on very soon.   
     
    The more I read on this, the more it looms large in my mind the need for companies to realize that Amazon is not a retailer.  It will not compete like a retailer.  It is a platform, a network, a tool for removing or at least significantly reducing the gap between Want and Have – that gap is Amazon’s entire focus.  One-click ordering, same-day shipping, near limitless assortment, product reviews, intelligent recommendations, easy returns, etc.  It all chips away at any barriers in place that prevent the moment of sale from occurring and thus minimizing/eliminating the gap. 
     
    The focus for retailers has to be on their shoppers’ wanting and having in ways Amazon cannot – experiences and/or products and services that are differentiated and non-transferrable.


    I totally agree.
    KC's View: