business news in context, analysis with attitude

Published on: December 4, 2014

This commentary is available as both text and video; enjoy both or either. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, Kevin Coupe here. This is FaceTime with the Content Guy.

Back before Thanksgiving, I was giving a speech and during the Q&A session afterwards, I was asked a question that I'd never been asked before:

If you were going to open a food store, based on everything you know, what kind of store would you open?

Good question. Other than the fact that I reject one premise of the question - that I know very much - the inquiry actually made me think for a minute.

The short answer betrayed my prejudices, I think. I'd probably go small rather than big. I'd want to curate the item count to keep it manageable. I'd focus on fresh foods and specialty items as much as possible. And I'd constantly be thinking about differentiation, to make sure that the store I was operating wasn't just a "me, too" option.

I've had a chance to think about that answer since I gave it. In some ways, it was way too simplistic - it did not even factor in the market in which I'd be operating, the customer base that I'd be targeting, and the competition with which I'd be going to the mattresses.

I also didn't even begin to address the digital component, because any store I'd operate would have to have one … I just think you cannot be in the retail business these days without having some sort of e-commerce capability. To do so, I think, is to try to engage in a fight with one hand tied behind your back. I didn't talk about the importance of a real customer loyalty program, like the one Dorothy Lane Markets has had for years, eliminating the need fort mass marketing of any kind.

That said, the store I did describe is sort of the store in which I'd like to shop. I'm not sure if it is age or attitude or some combination thereof, but I increasingly find myself preferring small stores to big stores, and differentiated, fresh-food driven stores to those that don't do anything to create a unique brand image.

Ultimately I want to shop in a store that focuses on sustainable excellence and persistent innovation. And so, that's the kind of store I'd like to run, if I actually wanted to run a store.

Speaking of sustainable excellence, let me tell you a story. Over the Thanksgiving weekend, I was at a family get-together and one of my sisters, who lives in Pennsylvania, was raving about the Wegmans mobile app. It's changed her life, she said, making it possible for everyone in the family to add to the weekly shopping list and then, because pictures go next to products, making it possible for anyone in the family to do the shopping. And, she said, shifting to Wegmans' private label in a variety of categories has saved her a lot of money. She wasn't just a Wegmans shopper….she was a Wegmans evangelist.

And then something interesting happened. A different sister's boyfriend, an Australian fellow who has been living in the states for years, was listening to the conversation. And he told me that he'd been in a Wegmans store in 1995 - and to this day, he said, it is the best supermarket that he'd ever been in. (He doesn't live near one anymore, or he'd be a loyal Wegmans shopper as well.)

Think about how the industry has changed since 1995, and how extraordinary and ahead of the wave that Wegmans must have been to be described in that way.

Talk about a focus on sustainable excellence and persistent innovation.

And just for a minute, consider whether the stores you run or the stores you patronize meet those criteria, within whatever format or constraints they may happen to have.

At the risk of seeming to yet again hype my new book, "Retail Rules!" (available now on Amazon and from the publisher here), I am reminded of the folks at Stumptown Coffee in Portland, Oregon, about whom I wrote in Rule 45 … teaching us that "it's not worth doing if we can't do it right."

A rule to live by.

That's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.

Published on: December 4, 2014

by Kevin Coupe

There were a couple of stories that I read yesterday that highlighted the importance of constant renewal and reinvention, and how important it is never to think that the job is done and the goal achieved.

In the New York Times, there was a piece about how Boston's iconic Faneuil Hall Marketplace, which in 1976 pretty much invented the idea of turning rundown urban and historical spaces into what was called a "festival marketplace," influencing similar developments in places like New York (South Street Seaport) and San Francisco (Fisherman's Wharf), is about see a significant overhaul and reinvention.

Part of the the problem for Faneuil Hall has been that while it is an enormous tourist attraction, Bostonians tend to stay away in droves, and there has been a real focus on creating a more resident-friendly environment; there also is a plan that will actually highlight rather than obscure the historical facade. Ironically, the folks in Boston are looking to New York for inspiration; Bryant Park, in Manhattan, is a direct descendent of the Faneuil Hall approach, which many people believe actually has improved the concept, and it will be used as a model for what can be done in Boston.

You can read the entire story here, and it strikes me that this is an important lesson in how important it is to keep innovating, to keep finding ways to improve a brand.

The second story that grabbed my attention was a long interview in New York magazine with comedian and film director/actor Chris Rock, timed to coincide with the release of his new film, Top Five. In the piece Rock talks about a lot of things - racism, Bill Cosby, politics - but one of the subjects that grabbed my attention was the need for comedic reinvention.

In one sound bite, he talks about the need to stay current with technology and cultural references:

You have to understand it, because if you don’t, then you’re going to sound like an old guy. You got to have the ability to use it as a reference. A lot of the time, the difference between hip and unhip is just reference. We did some sketch the other night on SNL, and in it I tell my wife — actually, we messed it up, but it was better in the dress — anyway, I tell my wife, 'Hey, honey, the cab’s here.' Then I look at it again. I go, 'You know what? We got to rewrite this.' 'Hey, honey, the Uber’s here.' That little difference, it’s a big, big deal. I remember seeing Robin Williams at Town Hall. He did some Elmer Fudd bit, and I was like, dude, if you change that to SpongeBob … You’ll seem a lot hipper. I do not wish to become Alan King…

And, Rock comments about the late Joan Rivers:

Great person, underrated comedian. Who the hell’s funnier than Joan Rivers? That whole reference thing: Joan updated constantly … Okay, these Liz Taylor jokes are gone, and they are now Lindsay Lohan jokes. The compliment you give of a comedian is: Who wants to follow them onstage? Nobody wanted to follow Joan Rivers, ever. Even in her 80s, nobody wanted to follow her.

It is a funny, thoughtful and occasionally profane interview, and you can read it here.

Call it what you want. Reinvention. Renewal. Updating.

Whatever.

The critical thing is never to become complacent.

It is an Eye-Opener.

Published on: December 4, 2014

WebProNews reports that Uber "has just expanded its grocery delivery service, and given it a shiny new brand name.

"Uber first launched the pilot test of the 'Corner Store' service in Washington D.C. in August delivering a variety of grocery items between 9AM and 9PM. Now, the company has expanded the service and renamed it UberEssentials. The service promises to deliver items to users (who simply pay using their Uber app) in ten minutes or less. That’s pretty fast."

The story goes on:

"If successful, this could pose a real threat to companies like Amazon and Google who are trying to expand into quicker product delivery and grocery delivery itself. eBay just scaled back its own same-day delivery service, but that wasn’t for groceries or everyday items like UberEssentials. That very market along with Uber’s rising popularity as a convenient taxi alternative could mean big things for this particular offering. The fact that what started as a limited 'weeks-long' test is already expanding with a new brand is a pretty good sign."

Published on: December 4, 2014

Seeking Alpha reports that Amazon quietly "has launched a restaurant takeout/delivery-ordering service that's integrated with its Amazon Local site and apps."

The service, called "Takeout & Delivery," is only live in Seattle - for the moment.

According to the story, "The service represents new competition for GrubHub, whose GrubHub and Seamless platforms collectively dominate the U.S. online takeout/delivery-ordering market. GrubHub claimed 4.6M active diners in Q3."

Published on: December 4, 2014

The Associated Press has a story about how retail beacons "are popping up everywhere," providing retailers with a new way to communicate with consumers in a targeted and economical fashion.

The AP frames the story this way:

"The square or rectangular devices, smaller than a smartphone, can hang on a wall or be placed on a machine and communicate with your phone via Bluetooth signals. Accessed through apps you download to your smartphone, beacon technology can do everything from guide you to the correct airport terminal to turn on your coffee maker as you sleepily enter the kitchen. In retail, beacons aim to entice you to spend money. As you enter a store, your smartphone might light up with a sale alert. Stand in the dress section for a while and a coupon may pop up for something on a nearby hanger."

And, some interesting statistics:

"Between July and September, 30 percent of shoppers who received a "push-ad" from an in-store beacon used that offer to buy something, according to a survey by Swirl, a marketing company that has created beacon plans for retailers such as Lord & Taylor, Hudson's Bay, Alex and Ani, Kenneth Cole and Timberland. Sixty percent of shoppers opened beacon-sent messages, and over half of those surveyed said they would do more holiday shopping at the stores as a result of their beacon experience."

Published on: December 4, 2014

The Chicago Tribune reports that Roundy's-owned Mariano's Fresh Market, which has been expanding all over the Chicago area and now has 29 stores there, now is expanding its geographic connections by establishing "a new partnership with the Italian Trade Agency to bring products from southern Italy to its stores, a move it could replicate with other countries as the growing grocer hopes such specialty fare will help it stand out from rivals."

According to the story, "Mariano's already promotes specialty international foods in its stores. Aisles filled with foods from Italy, Mexico and other countries typically feature flags and other decorations. Now, the chain is taking the effort a step further, starting with the Italian partnership, as it tries to procure products that shoppers might not be able to find at other grocery stores … Mariano's has sent executives to Italy and has hosted Italian companies in Chicago as it tries to build relationships with Italian producers. The process also can cut out the need to work with middlemen and help the chain keep a lid on costs." The company reportedly "now receives several containers of products from Italy each month, up from perhaps fewer than one every other month a year ago."

Published on: December 4, 2014

Microsoft CEO Satya Nadella is back in the news on the subject of salaries.

It was just about two months ago that Nadella created a social media firestorm when he suggested at a conference that women should not ask for raises when they think they deserve them, but rather should trust the system to reward them appropriately. Afterwards, he backed off his statements, saying he has misspoken.

Here's what Nadella originally said - ironically, at a conference on women in technology: "It’s not really about asking for the raise, but knowing and having faith that the system will actually give you the right raises as you go along … That, I think, might be one of the additional superpowers that, quite frankly, women who don’t ask for a raise have. Because that’s good karma. It’ll come back because somebody’s going to know that’s the kind of person that I want to trust. That’s the kind of person that I want to really give more responsibility to. And in the long-term efficiency, things catch up.”

Well, it ends up that there is a reason that Nadella has so much faith in the system and so much belief in karma.

Yesterday, Microsoft shareholders approved an $84 million pay package for Nadella. The bulk of it consists of stock grants that will not vest for several years.

Published on: December 4, 2014

• The Associated Press reports that Rite Aid has agreed to write a check for almost $3 million to settle a federal whistleblower lawsuit that charged the company with violating the False Claims Act from 2008 to 2010 "by offering gift cards to entice Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies."

The story says that while Rite Aid wrote the check, it did not admit any wrongdoing, and insists that it only settled the case to avoid more litigation.


• The Dallas Morning News reports that The Fresh Market has opened the first of four planned stores in the Dallas marketplace; it was just last year that it entered the Texas market with four stores in Houston.

According to the story, "Like other companies that have recently opened multiple stores here - Aldi, Trader Joe’s and WinCo Foods -The Fresh Market thinks it brings something different.
The Fresh Market stores try to create a European market feel, with classical music playing, hanging scales in the produce section and checkout lanes under a wooden canopy."

The focus, the company says, is on "high-quality products and value perishables and ambiance."

Published on: December 4, 2014

The other day, we had a story about how movie theaters are having to improve their offering as a way of competing with all the other entertainment options available to people. And it was noted here that the ability of theaters to compete is tied to the quality of the movies they show, and that 2015 will almost certainly be a better year because of the scheduled release of a little film called Star Wars: The Force Awakens.

And above, MNB talked about the importance of renewal and reinvention.

Well, speaking of both subjects…

This morning, the folks at Eon Productions in the UK announced the beginning of filming of the newest James Bond movie, scheduled to be released next November and that seeks to continue to remarkable reinvigoration of the 007 brand that started with Casino Royale and hot new heights with Skyfall.

Entitled Spectre, the movie looks to offer the return of Ernst Stavro Blofeld, who served as the chief villain in the early Sean Connery Bond films, and who heads up the Special Executive for Counter-intelligence, Terrorism, Revenge and Extortion.

Directed by Sam Mendes, who helmed Skyfall, Spectre will once again star Daniel Craig as Bond, and also will feature Christoph Waltz, David Bautista, Monica Bellucci, Lea Seydoux, Andrew Scott, and, Ben Whishaw (as Q), Ralph Fiennes (as M), and Naomie Harris (as Miss Moneypenny).

Published on: December 4, 2014

Yesterday, MNB took note of a Reuters report that a US district judge in Minnesota has ruled that Target must defend itself in a lawsuit "by banks seeking to recoup money they spent reimbursing fraudulent charges and issuing new credit and debit cards because of the retailer's late 2013 data breach."

Target had sought to have the suit dismissed.

The judge said that because Target played a "key role" in making its systems accessible to hackers, "this justified letting the five bank plaintiffs, which seek class-action status on behalf of lenders nationwide, pursue much of their lawsuit accusing the second-largest U.S. discount retailer of negligence and violating Minnesota consumer protection laws. The banks are seeking millions of dollars in damages."

My comment:

I think in cases like this, Target at the very least must face the accusations in court, where evidence will be introduced and witnesses examined and cross-examined. I have no sympathy for banks, but the issue of culpability - both in this case, and in the larger scheme of things, considering the degree to which hacking has become a major issue - must be decided.

One MNB user disagreed:

If I follow the judge’s logic, then if the cash in a retail store register is stolen, the store owner had a “key role” in making the cash drawer “available” to the guys with the guns?     Wow.

Rather, I think the logic behind the ruling is that there have been reports that Target did not do everything it could have done to prevent the breach, and should at least have to defend itself in court.

I would assume that Target's lawyers will argue that the banks have as much or more culpability.

That's what courtrooms are for. They are where innocence and guilt, not to mention responsibility, are supposed to be determined.

(This is a statement that would be viewed with some ironies in certain American neighborhoods, I concede.)

On the same subject, another MNB reader wrote:

Maybe they will finally get off that CurrentC bandwagon which is even more hackable and allow customers to use secure Apple Pay.  If credit cards were hacked, I’m not about to give Target and others access to my bank account through CurrentC where hacking consequences rest with me.  No way, no how.  I will continue to swipe my credit cards where I have protection from my bank before I’ll ever go to CurrentC at Target or anywhere.  I was one of those hacked at Target and at Home Depot, and a few years prior at Target was compromised on my checking account by the company Target used to approve or disapprove checks.

It seems really odd that one of the major retailers suffering a huge data breach refuses to allow customers to use what is currently the most secure payment system on the planet, and that being Apple Pay.  It seems that many of the others also suffering data breaches are following down the same path.  What could they be thinking…….is it cheaper to be sued for data breaches and hope to get into customers bank accounts to avoid credit card charges than it is to go to what customers want to use for security and that is Apple Pay?  I have made it a point to shop first where Apple Pay is allowed, and where it is not will continue using my credit card.

And there's one of the arguments that will determine Target's culpability.

From another reader:

Not to defend Target on the data breach and subsequent legal problems, but I hope that Target’s lawyers would launch a counter suit against the banks for denying American consumers (and merchants) access to the more secure credit cards and credit card processing systems that have been in place elsewhere in the world for years.

I hate to see anything happen that will keep so many lawyers employed. But I think this issue has to be decided, and I can't see any other alternative for a comprehensive hearing and airing of the facts.




On another subject, and MNB reader sent the following email:

Good post this morning about Martha Stewart and magazines. A few thoughts on her declining empire.

Her brand is built around her. At 73 years old, she will have her challenges connecting with a new, younger audience (and likely cashing out, if and when, the time comes).  A few icons in the fashion industry have successfully kept their brands alive by bringing in very talented designers to stay current but it is very hard to do when you are both the name, and the face, of your brand.

Pinterest. The first time I went on Pinterest, my initial reaction was “wow, this might kill the magazine industry”.  Pinterest is always current, interesting, custom tailored to its audience and immediately allows the user to tailor their clicks to their interests, in that moment. Magazines will be challenged to compete with that, in print, and on line.  We have ditched every magazine subscription except Ski magazine. Some old habits die hard.

Precisely. But only some.




And, remarking on the headline used on our FreshTalk story yesterday, one MNB reader wrote:

Outstanding Chico Escuela reference, Kevin!!!

I love it when folks get the jokes and references.

Of course, I'm painfully aware that I've violated the very rule that Chris Rock talks about in our "Eye Opener" piece, above … because there is a sizable percentage of the MNB audience that has absolutely no idea who Chico Escuela is.

C'est la vie.