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    Published on: December 1, 2014

    by Kevin Coupe

    Fascinating pieces in the New York Times that offer business lessons for many brands….

    The first story has to do with the movie theater industry, which, having seen ticket revenue drop four percent this year, is looking for new ways to get people out of their houses and into the theaters. "Having tried 3-D films, earsplitting sound systems and even alcohol sales in pursuit of younger moviegoers, some theater chains are now installing undulating seats, scent machines and 270-degree screens," the Times reports.

    “When I step back and think about what will get people off a couch, in a car, down the road and into a theater, the answer is not postage stamp-sized screens and old seats,” Gerardo I. Lopez, the chief executive of AMC Entertainment, the No. 2 chain in the United States, tells the paper. “Why would they bother? What the hell, stay in the house.”

    The story goes on:

    "The decline has hammered the biggest theater companies, with profit at both AMC and Regal Entertainment, the No. 1 chain, plunging more than 50 percent through the first nine months of this year, compared to the same period a year earlier.

    "But what really has the exhibition industry unnerved are two statistics released in the spring by the Motion Picture Association of America. Last year, despite a glut of extravagant action movies, the number of frequent moviegoers ages 18 to 24 dropped 17 percent, compared to a year earlier; the 12-to-17 age bracket dropped 13 percent.

    "The undiscerning young ticket buyers Hollywood has long counted on to turn out weekend after weekend are suddenly discerning. Or they are at least busying themselves with video games, living room wide-screen televisions and devices that can pull up thousands of movies with a couple of clicks. For many teenagers, the idea of focusing on a single screen for an extended stretch is anathema."

    You can read the entire story here.

    Ironically, the Times had a story over the weekend about how Netflix is trying to build a global brand by creating content that will, in fact, try to entice people to stay home. Following domestic successes with "House of Cards" and "Orange Is The New Black," Netflix is about to unveil its newest original series - a 10 episode, $90 million project called "Marco Polo," which it believes will have international appeal and drive up its global subscriber growth.

    It is just the latest strategic move by a company that started out renting DVDs via the internet, but that has embarked on a much broader path in recent years, positioning itself as competitive to broadcast and cable networks as a content producer and supplier. While Netflix has suffered some stumbles and not every analyst is convinced that its current strategies will be successful, the company seems to believe that this is the only way it can survive long-term. Indeed, Netflix CEO Reed Hastings has gone on record as believing that traditional broadcast television will be obsolete within 15 years, and Netflix seems to believe that it needs to carve out a place in this new landscape if it is to survive.

    You can read the Times story about Netflix here.

    In terms of broader business lessons, I'd suggest that the study about declining theater attendance among young people is instructive. The simple fact is that young people have little or no allegiance to what many of us think of as traditional consumption experiences. I think over the long term, they'll go to stores when the stores seem relevant and compelling, and they'll shop online when it suits their needs and desires. Just as it seems clear that young people will go to movie theaters when those theaters offer them something they can't get elsewhere, and they'll stay home and watch smaller screens when those screens provide content they find compelling.

    It is very simple, in my view. Successful consumer-driven businesses have to provide unique content in a compelling and differentiated environment. Do that, and consumers will come. Be a "me, too" business, and people will find other places to spend their money.

    One other thing. I'm willing to go on record right now as saying that movie theater companies are going to have a better 2015 in terms of box office receipts than they experienced this year.

    The reason has nothing to do with undulating seats, scent machines and 270-degree screens.

    Nope, it has to do with a little movie coming out next year called Star Wars: The Force Awakens.

    Because differentiated content is the key to differentiated success.

    (BTW…you can see the first teaser trailer for the new Star Wars movie here.

    And may the force be with you.
    KC's View:

    Published on: December 1, 2014

    The National Retail Federation (NRF) says that initial estimates say that total Black Friday sales - both in stores and online - totaled $50.9 billion, down 11 percent from the same day a year ago.

    The reason? Experts say that because Black Friday sales started earlier in the week and were stretched out over a number of days, it took pressure off the day after Thanksgiving, which has served as the traditional beginning of the holiday shopping season. For example, the Wall Street Journal reports that Target Corp. "offered its first round of so-called Black Friday deals on Nov. 10, while Wal-Mart Stores Inc. kicked off its holiday promotions at the start of the month."

    NRF also said that the average person who shopped over the weekend spent $159.55 at online retailers, down 10.2 percent from last year.

    Bloomberg reports that "store traffic climbed 27 percent on Thanksgiving compared with a year earlier," perhaps a reflection of how many more stores expanded their Thanksgiving hours this year.

    Reuters reports that some shopping p[lans may have been affected by the fact that "across the United States, shoppers were greeted by protesters at hundreds of stores - some calling for higher wages at Wal-Mart Stores Inc , others protesting the decision of a grand jury not to indict a white police officer in the August shooting of an 18-year-old unarmed black man in Ferguson, Missouri."

    And CNBC reports that "Wal-Mart, which kicked off its Black Friday sales at 6 p.m. Thursday, said more than 22 million people visited its stores on Thanksgiving Day, which was comparable to the figure it announced in 2013. The world's largest retailer added that Thursday was also its second-highest online sales day ever, which was topped only by Cyber Monday last year. At Target, the number of online orders and sales increased more than 40 percent compared to the prior year, setting a record as its biggest online sales day ever. The retailer said hundreds, sometimes thousands, of people were waiting in line before its 6 p.m. openings."
    KC's View:
    I remember years ago hearing from a Walmart executive that the company hated Black Friday, feeling that all the sales it had to run that day actually eroded its message of "always low prices," since on Black Friday, the prices got lower. It probably is healthier for everybody if we stopped focus on one day as being the barometer of how holiday sales are going to shape up, and instead create an environment that is less pressured, more considered. It'll be better for retailers, and better for consumers.

    Today is so-called Cyber Monday, but we may find that it has lost some of its luster, too.

    Published on: December 1, 2014

    Bloomberg Businessweek reports that when new US Food and Drug Administration (FDA) rules go into effect requiring a wide variety of venues - including restaurants, grocery deli counters, convenience stores, and movie theaters - to post calorie counts on their menu boards, "experts anticipate that it’ll change what restaurants decide to put on menus in the first place—changes that are already happening. According to a study published last month in the American Journal of Preventive Medicine, some major chain restaurants have introduced healthier options in advance of the anticipated FDA rules, which were first proposed in 2011.
    Researchers found calories declined in new beverages, children’s menu options, and main courses."

    What seems less clear, the story says, is whether the changes will have an impact on consumer behavior.

    Bloomberg Businessweek writes that "people don’t opt for healthier food when calories are posted without context, according to a July analysis of 17 studies on menu labeling published in the Journal of the Academy of Nutrition & Dietetics. The FDA’s rule, however, will require restaurants to append a reminder: '2,000 calories a day is used for general nutrition advice, but calorie needs vary.' Research shows that these kinds of details help people interpret the numbers they see next to their burgers and burritos, leading some to pick lower-calorie foods."
    KC's View:
    I know that many of my industry friends disagree with me on this, but I continue to believe that calorie information in all of these locations makes sense - it allows consumers to make informed decisions. If that means that some companies have to change products and formulations, so be it … and I have to admit that much of the hand-wringing about productivity is just blowing smoke. We live in an information-centric world, and retailers of all stripes need to get used to it.

    Published on: December 1, 2014

    There are a number of stories in various newspapers this morning about how Amazon is deploying more than 15,000 robots in 10 "eighth generation fulfillment centers" around the country that utilize "robotics, Kiva technology, vision systems and almost 20 years' worth of software and mechanical innovations to fulfill holiday orders." Taken with 80,000 seasonal employees hired to fulfill holiday orders this year, a 14 percent increase over 2013, Amazon says that its infrastructure is primed (pun intended) to handle an expected crush of online business.

    The Los Angeles Times writes that "since acquiring robot-maker Kiva, a Massachusetts company, for $775 million in cash in 2012, the e-commerce retailer has been increasingly implementing automation at its gargantuan fulfillment centers. Kivas, which resemble overgrown Roombas, are capable of lifting as much as 750 pounds and glide across Amazon's warehouse floors by following rows of sensors."

    And Dave Clark, Amazon's senior vice president of worldwide operations and customer service, tells the Times "that because Kiva-equipped facilities eliminate the need for wide aisles for humans to walk down, eighth-generation centers can hold 50% more inventory than older warehouses. More storage capacity means a wider selection of merchandise, fewer chances of products being out of stock and more possibilities for same-day delivery, he said. "

    The robotics operate in 10 out of Amazon's 109 global warehouses.
    KC's View:
    Yikes. I can't help but think that when Skynet goes live, it is at least possible that Jeff Bezos will be the guy who pushed the button.

    Published on: December 1, 2014

    In the UK, This Is Money reports that Sir Terry Leahy, the former Tesco CEO, says that he was "shocked" by what has happened at the troubled retailer since his departure, and insisted that the company had not grown too big and cumbersome on his watch. Leahy argued that Fresh & Easy, the company's ill-fated attempt to move into the US market, would have succeeded if given more time.

    According to the story, "In a rare speech since Tesco’s fall from grace, the business knight said Tesco 'had lost sight of its customers’ at a crucial time where it is neither a discounter nor operating at the premium end of the market." And Leahy said "the depth and impact of the recession has gone on ‘longer than anyone predicted’."

    Tesco has endured a series of problems since Leahy left the company, including declining sales and profits … the forcing out of Leahy's replacement, Philip Clarke … and the current financial scandal in which the company said it had overstated projected revenues and understated expected costs, resulting in inaccurate guidance given to investors and analysts.

    In other Tesco news, there are press reports that as many as three of the senior executives who were suspended - though not blamed - when the financial improprieties were made public have now left the company.

    The Financial Times reports that group commercial director Kevin Grace, UK finance director Carl Rogberg and UK food commercial director John Scouler have all left Tesco, even as a variety of probes look into the circumstances that led to the misstatements.

    Tesco has not yet commented on the departures.
    KC's View:
    From now on, when I see or hear the name Terry Leahy, I'm going to think of Claude Rains playing Major Strasser in Casablanca: "I'm shocked, shocked to find that gambling is going on in here!"

    Leahy built the company we know as the modern Tesco, and it strikes me as such a load of crap for this guy to think and/or say that it all went downhill when he left the company.

    Published on: December 1, 2014

    Crain's Chicago Business has a story about how "a trio of hip retailers is opening Chicago locations in Bucktown and Lincoln Park - but please don't call them mere stores.

    "Eyewear label Warby Parker, watchmaker Shinola and socially conscious shoe and accessory brand Toms aim to create 'third places' - destinations away from home and work where like-minded people can hang out, make connections and do something besides buy stuff." The goal of the retailers is to "solve the problem of waning enthusiasm for brick-and-mortar shopping."

    The story can be read here.
    KC's View:

    Published on: December 1, 2014

    The Financial Times reports that "BMW will this week launch its pay-as-you-go car club in London in the latest sign of carmakers’ eagerness to tap the 'sharing' economy.

    "The German manufacturer, which has steered a revival of its popular Mini brand in the UK, will on Thursday announce the arrival of its DriveNow scheme in London following launches in Berlin, Vienna and San Francisco. Launched in 2011, DriveNow, a joint venture with Sixt car rental company, has 360,000 customers in Germany, making it the country’s biggest car-sharing organisation. The company intends to launch in 15 European cities outside Germany and 10 in North America.

    "London is the biggest market in Europe by members for the round-trip car club model operated by the likes of Zipcar – where vehicles are picked up and dropped off in the same location." One difference - unlike Zipcar, one does not have to drop a DriveNow car off in the same place where one picked it up.

    The story goes on: "The growth in car sharing presents a big threat to established carmakers – which is why manufacturers including Volkswagen and Peugeot-Citroën are pushing into the sector. AlixPartners, the consultancy, has estimated that just one car sharing vehicle takes out 32 personal purchases. Brokerage Aviate Global has estimated that just 5 per cent growth in car sharing by the end of the decade could halve US auto sales."
    KC's View:
    Which is what a lot of manufacturers, in a lot of different industries, may try to do if they feel that retailers and traditional service providers are hurting their businesses. The word is "disintermediation."

    Published on: December 1, 2014

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

    • The New York Times this morning reports that Meredith Corporation is bringing out a new quarterly magazine, Eat This, Not That! that is based on the longtime column in Men's Health magazine.

    According to the story, "the new 120-page magazine, which will make its debut on 80,000 newsstands and other locations on Tuesday, costs $13. It features articles on topics like recipes to maximize nutrition and weight-loss impact and a guide for making smart decisions when dining at well-known restaurants."

    The magazine is being started in partnership with David Zinczenko, the former top editor at Men's Health who wrote the column for years. When he left Rodale, which publishes Men's Health, Zinczenko eventually acquired the "Eat This, Not That!" brand from the company and began shopping it around.

    Because what the world really needs is another magazine. Not to mention another diet-oriented magazine.


    Bloomberg reports that "billionaire investor Sam Zell confirmed he’s interested in snapping up about 140 stores to be divested as Cerberus Capital Management LP acquires Safeway Inc. and merges it with the Albertsons LLC grocery chain.

    "The forced divestiture presents a 'good opportunity,' Zell told Maria Bartiromo during an interview on Fox News this morning. If he’s successful, any such deal would probably be a 'one-off' acquisition rather than herald a new investing strategy, Zell said."

    And we all know how well it does for retail stores when they are acquired by guys who know nothing about retailing in one-off acquisitions. They'll cut costs, which will result in diminished products and services, and hurt the stores' ability to be competitive.
    KC's View:

    Published on: December 1, 2014

    will return.
    KC's View:

    Published on: December 1, 2014

    In Week 13 of National Football League action…

    Chicago 17
    Detroit 34

    Philadelphia 33
    Dallas 10

    Seattle 19
    San Francisco 3

    San Diego 34
    Baltimore 33

    Cleveland 10
    Buffalo 26

    Tennessee 21
    Houston 45

    Washington 27
    Indianapolis 49

    NY Giants 24
    Jacksonville 25

    Carolina 13
    Minnesota 31

    New Orleans 35
    Pittsburgh 32

    Oakland 0
    St. Louis 52

    Cincinnati 14
    Tampa Bay 13

    Arizona 18
    Atlanta 29

    New England 21
    Green Bay 26

    Denver 29
    Kansas City 16
    KC's View:

    Published on: December 1, 2014

    With the New Year right around the corner, your customers will be looking for the right products to help them eat clean or trim off those holiday pounds without neglecting their sweet tooth.

    Organic Stevia is a zero calorie, natural sweetener that is perfect for sweetening coffee, teas, smoothies and baked goods. Currently, the #1 Organic Stevia in the country!

    Organic Sweet and Lite is the perfect baking blend made of sugar and stevia. It performs like sugar in baking with half the calories!

    Organic Coconut Palm Sugar is a rich, unrefined brown sugar with a deep caramel flavor that comes from the sweet nectar of the coconut palm tree. It’s delicious in brownies, cookies and cakes and commonly used to sweeten Asian dishes.

    Organic Honey is delicious with hot tea, warm biscuits, hard cheeses or Greek yogurt. It’s free from GMOs, pesticides and antibiotics since the honeybees only forage on organic wildflowers.

    Make sure your shelves have these top first quarter sweetener choices in 2015! Contact Wholesome Sweeteners’ Customer Service at 1(800) 680-1896 or CS@OrganicSugars.biz

    KC's View:

    Published on: December 1, 2014

    Join independent retailers and wholesalers, food/CPG manufacturers, and service providers for unparalleled opportunities to learn, network, and drive profitable growth in the independent supermarket sector at the 2015 NGA Show, February 8 ­ 11, in Las Vegas!

    Over the course of four days, attendees have the chance to take part in more than 30 education workshops on issues impacting their bottom line such as: consumer engagement, digital marketing, technology, food safety, data security and more!

    The 2015 Expo Floor will have even more exhibitors and pavilions in categories such as produce, meat, technology, and GM/HBC, and numerous opportunities to see the solutions you'll need all in one place!

    For more information, click here.

    KC's View: