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    Published on: March 17, 2015

    by Michael Sansolo

    It’s hard to imagine any company that does a better job of changing with the times than those imagineers at Disney. Especially when it comes to imagining how to build new sales.

    No matter what your age or gender, Disney has its marketing sights set on you all the way up to a pair of $5,000 Jimmy Choo shoes modeled after a pair worn in the new Cinderella live-action movie (which, despite some pretty awful reviews, dominated the box office last weekend).

    But with heels like those, let’s walk before we run.

    The topic of Disney’s endless evolution was something Kevin Coupe and I discussed briefly this weekend at the annual IGA Global Rally held just a few miles from Disney World in Orlando. Obviously, we think it is a story worth telling.

    Kevin explained the transformation of Disney pictures through the years, especially the willingness of the company to acquire hot brands that were born far from the Disney universe. It started with the acquisition of Pixar, and then a decision to put that company's leaders in charge of Disney's animation business, as well. The result has been things like Frozen. Disney also acquired the right to many of Marvel's superheroes (like Iron-Man, Hulk and Captain America), and through its acquisition of Lucasfilm, owns the Star Wars and Indiana Jones franchises, which no doubt means we'll be seeing new adventures in both those universes. These wells are far from dry.

    In equally dramatic fashion, Disney has figured out new ways to bring endless generations into the thrall of its magic complete with new and creative ways to monetize those moments. I’m happy that my daughter was born before the princess thing became so huge. Seriously, I don’t think I could have swallowed the $200 bill for a Princess makeover at the Magic Kingdom.

    Yet clearly people are forking over $105 to visit the parks only to drop hundreds more to allow their daughters to look like Ilsa or Belle for a couple of hours.

    But again, it doesn’t stop there. As countless media outlets reported last week, the release of the new Cinderella comes with an entirely new range of products for girls who are long past the princess stage, yet still want their own form of magical glamor. There’s the $600 necklace, the $75 champagne flutes and, of course, those $4,995 Jimmy Choo’s.

    Let me be clear: I’m not crazy about any of this, but I’m not offended either. Good marketing isn’t about stealing money, it’s about creating excitement and moments that thrill. If customers have the money and desire to buy a 10-year-old the Jasmine treatment or allow a 40-year-old to wear some incredible shoes, I’ve got no complaint.

    It’s simply clever marketing; it’s excellent brand reinforcement and building; and all of that should be applauded. Making the ordinary special is what all merchants need do.

    The truth is that Disney had no guaranteed success. Countless other theme park operators have gone out of business as have other movie studios. Somehow the people at Disney found a way to recapture their magic or regain it by strategic acquisitions.

    So while I’m not that crazy about the entire princess ideal, the real point is that any company that so successfully rebuilds itself is a model to be considered, studied and possibly copied.

    In other words, let it go. But do it in a way that works for you.

    Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.
    KC's View:

    Published on: March 17, 2015

    by Kevin Coupe

    It was just last week that HBO announced that it would for the first time make its programming available via a streaming service - at first only available on iTunes, but soon to be available on other web-enabled devices. HBO Now, the company said, would be part of the revolution in how people watch TV; people will now be able to see "Game of Thrones" or "Last Week Tonight with John Oliver" without having a traditional cable service and an HBO subscription, but rather by paying an al a carte fee of $14.99 a month.

    It took less than a week for a traditional cable company to get in on the action.

    Cablevision yesterday became the first mainstream cable company to announce that it will also offer the service to its internet customers when it becomes available in April.

    At the same time, Variety reports that Apple plans to offer a TV service later this year that would offer a number of traditional broadcast networks and cable networks, but in a smaller package than the hundreds generally offered by the cable companies. The goal is to keep the cost down ... and this is a category in which there is enormous movement, with a number of big companies having announced or reportedly planning to announce similar initiatives.

    Add to this the report that "Seinfeld," the iconic sitcom that already has made millions in traditional syndication, may get sold to an online video service for a price of something like a half-million dollars an episode. (There are 180 episodes.) The bet here is that such availability, both to new viewers and people who have memorized every line and seen every episode countless times, can generate significant revenue when made available to cord-cutters.

    "Seinfeld" was always positioned as a show about nothing. But it has turned out to be a show that almost certainly about making a fortune.

    There are two Eye-Opening points here.

    One is that technology is making it possible for long-term consumption habits to change in fundamental ways ... and it would be foolish for any consumer-facing business to assume that this cannot happen in their space.

    The second is that almost all the changes seem to be happening in a way that gives the consumer more power, not less. The vast majority of what is available on my cable service is stuff I absolutely have no interest in ... and these kinds of services are going to allow me to pick and choose what I want, and eventually have all these products available to me on whatever device - TV, iPad, iPod, iPhone, laptop - happens to be closest at hand.

    In other words, what I want ... how I want it ... where I want it ... at a price that I think seems appropriate. In essence, to use a "Seinfeld" phrase in a different context, we all want to be masters of our own domains.

    I cannot emphasize this too strongly. This will happen in every space, to every business. Some will take longer than others, and in some cases, the changes will begin as a trickle and quickly turn into a deluge.

    Attention must be paid.
    KC's View:

    Published on: March 17, 2015

    The Minneapolis/St. Paul Business Journal reports that Target has disclosed exactly how much money it is spending to get traction in the e-commerce space.

    The story says that "Target's share of capital expenditures for opening new stores and store remodels declined from 58 percent in 2012 to 27 percent in 2014, according to its 10-K annual report. In actual dollars, spending on new stores fell from $673 million in 2012 to $381 million in 2014. Remodeling expenses dropped from $690 million to $99 million during the same period.

    "Meanwhile, the Minneapolis retailer increased its annual investment in information technology and distribution from $982 million in 2012 to $1.3 billion in 2014."

    It is expected that Target will continue this trend in 2015, and it plans to open just 15 new stores, half of them small format units.

    The Journal writes that "the figures highlight Target's move toward an 'omnichannel' shopping experience - one that ties together physical shopping with online and mobile methods. The company in recent months has launched mobile apps, improved shipping capabilities and lowered the threshold for free shipping."
    KC's View:
    This simply makes sense. Target has to try to get in the game with Amazon, and find some sort of e-parity with Walmart, which is itself spending something like a gazillion dollars in the digital space. If Target is going to be relevant to the next generation of consumers, it has to spend now on building the requisite infrastructure.

    So do you.

    Published on: March 17, 2015

    The Portland Business Journal reports that Portland,Oregon-based New Seasons Market will open its first store in California this month in San Jose, "setting the stage for a southern expansion that could eventually add one to two new stores a year in the Bay Area." New Seasons, backed by Endeavour Capital, "is converting one of the eight New Leaf Community Market stores it acquired in 2013 after customers there asked it to carry more than natural and organic products."
    KC's View:
    The story makes the point that the conversion has taken place over a year, as New Seasons wanted to get the mix absolutely right. If this works - and I have a lot of confidence in the New Seasons folks - it could set the stage for some interesting developments. Don't forget, the New Seasons CEO, Wendy Collie, comes out of Starbucks ... and she knows a lot about how to ramp up an expansion while maintaining cultural integrity.

    In addition, it is worth noting that Endeavour also has ownership stakes in both Bristol Farms and Metropolitan Markets, two wonderful West Coast independents ... so it has a lot of brain power and marketing raw material to work with as it looks to expand its retail footprint.

    Published on: March 17, 2015

    The Week reports that "roughly one in 10 beers sold in the U.S. are from American craft brewers, according to a new report from the Brewers Association. Last year, craft brewers produced 22.2 million barrels of beer, an 18 percent increase in craft beer volume."

    The story goes on to say that "small and independent brewers now account for 11 percent of America's total beer market, making 2014 the first time the craft beer industry saw a double-digit market share. And craft breweries are on the rise: Last year, America had 3,464 breweries, a 19 percent increase from 2013. Of those 3,464 breweries, 3,418 are craft."
    KC's View:
    Just last week, while at the Cask & Larder in Winter Park, Florida, I had this wonderful Experimental Pale Ale; last month, at the same place, they were offering a a different pale ale called Lycanthropy. Both were made in the back of the restaurant, both were tasty, and both offered something a little bit different, making the experience unique rather than usual. (The hush puppies were pretty good, too.)

    But the point is that craft brewers have identified an important competitive niche, differentiating themselves in a way that customers find to be compelling. It is all about taste, it is all about being local, it is all about something that is crafted rather than mass-manufactured. To me, there is no contest.

    Published on: March 17, 2015

    The Guardian reports that Dollar General is following the trend of increasing employee income, but not by giving its people raises. Rather, the story says, Dollar General "plans to offer workers at its 11,800 stores more hours.

    The company currently pays new part-time store hires the federal minimum wage of $7.25 per hour, with raises to $9 per hour coming after five months. The story notes that by giving those employees more hours, Dollar General hopes to be able to avoid across-the-board raises, though management says it will continue to monitor the landscape.

    "The market for quality customer service staff is getting competitive," the writes. "Over the last year, retailers like Ikea, Gap and most recently Walmart have increased wages in an effort to retain staff, improve customer service and cut down on training and recruiting. As the market for low-wage workers tightens, Dollar General hopes to entice good workers with a more full-time schedule, rather than higher wages."
    KC's View:

    Published on: March 17, 2015

    23andMe, the at-home DNA testing kit company that is backed by Google, now is getting into the drug development business, the Associated Press reports, "betting that it can translate its database of customer DNA information into novel medicines."

    The story says that "23andMe is best known for its saliva-based test kits, which offer users the chance to peek into their genetic code for clues about their ancestral past. But drug research has always been at the foundation of its business model. Much the way social media websites sell advertisers access to their user networks, 23andMe licenses the raw data from its DNA database to researchers. The company has more than 20 partnerships with drug companies including Pfizer and Roche, as well as with government and academic researchers.

    "But now 23andMe plans to pursue its own drug R&D efforts. CEO Anne Wojcicki said the company’s genetic insights could help streamline the time-consuming drug discovery process."
    KC's View:
    It is hoped specifically that by using customer DNA information, the company can cut down on both the time and dollars that traditionally have been necessary to develop new and effective drugs.

    I know very little about this science, but I just find it so fascinating ... I think that over the long-term, it is going to have a dramatic impact on what we eat and drink, what medicines we take, and both the quality and length of our lives. It is very exciting.

    Published on: March 17, 2015

    Reuters reports that WPP, the British advertising company, has made a mid to acquire a majority stake in Dunnhumby, the data collection and analysis business party owned by Tesco.

    The story notes that "Dunnhumby, which gathers and analyses data from almost 1 billion shoppers globally to help companies create customer loyalty and personalization programs, has been put up for sale as part of a drive by Tesco's new boss Dave Lewis to slash costs and sell assets to mend the group's finances."

    The precise WPP offer was not reported, but analysts say that Dunnhumby probably is worth something like $3 billion (US).

    Reuters reports that "Costco Canada's fish importing license has been suspended, the Canadian Food Inspection Agency said, after the federal food safety watchdog determined the company violated the country's Fish Inspection Regulations ... The CFIA said Costco violated rules that required written notification for each shipment of fish to an inspector either before or within 48 hours of importing the products, and regulations that stipulated imported fish cannot be moved without permission."

    While no recalls have been mandated, the CFIA said that "under the penalty, the wholesale retail giant cannot import fish products into the country until the agency is satisfied the company has implemented the necessary changes."
    KC's View:

    Published on: March 17, 2015

    • Haggen announced some new hires for its southwestern division, hiring Wendy Oliver, former VP in Albertsons' Southern California division, to be its new SVP, Operations.

    Chris Linskey, most recently EVP, sales, with Intelligent Clearing Network, will be the new SVP, Marketing.

    Rich Winters, former VP of sales and business development for Sun Pacific, will be its new VP, Fresh Foods.

    Jaime Praeger, formerly Smart & Final's director of Hispanic category management, will be the new VP, Center Store.

    And Melina Ranji, former director of recruitment and development for Trader Joe’s, will be the new VP, Human Resources.

    • In New Jersey, Inserra Supermarkets has hired Ron Onorato, most recently the senior vice president of operational initiatives at Ahold USA, to be its new president, succeeding Steve Chalas, who is retiring after more than 50 years with the company.
    KC's View:

    Published on: March 17, 2015

    Yesterday, MNB took note of a story saying that in Oregon, an organization called Clean Water Services, described on its website as a "water resources management utility committed to protecting water resources in the Tualatin River Watershed," has come up with a new way to save water. It wants to turn purified sewage water into beer.

    MNB reader Mike Franklin responded:

    First I heard of this. And I get my water from the Tualatin River Watershed…
    Ultra-filtration, reverse osmosis and enhanced oxidation makes water without terroir…water terroir is what makes our beer so good.


    From another reader:

    While there's plenty of squick factor in that article about purifying sewage to make beer, let's not forget that we are not discovering new water sources.  There's the same amount of water now that there's always been, although we're moving it around and not paying much attention to using less than we have at any given time -- plus there are more of us around to need it, so it seems like we're running out, even if we really aren't.  (how much of it is readily potable is another issue...)

    But way back in the dark ages, my elementary class went to a sewage treatment plant, and I vividly remember the guide telling us that water is recycled every day, so the water you drink today could have been peed by a dinosaur.

    So go ahead -- filter it, put it through reverse osmosis, and test it to make sure it's clean -- but the idea of drinking water that's been through someone's body is not a novel concept.

    On another water-related subject, one MNB user wrote:

    I am glad you mentioned the mega-drought predictions, because if they come true our country is on the edge of some severe changes in food supply.  Our water supplies come from only two places, surface sources or underground sources.  It is reported that both California and Texas are rapidly depleting their underground sources because drought has already drastically depleted their surface sources. If those droughts continue and the plains states are added to the mix, how much of the vital agricultural land that the U.S. currently uses for raising meat, produce and animal feed are going to become unusable due to lack of water?  I would bet that it is a fairly large percentage of the land that is currently being used.

    Who is currently taking this possibility seriously and are they developing contingency plans?  I think there has to be a role for the government and private enterprise in developing strategies for dealing with these water shortage issues, but I am afraid they are not being addressed with the sort of recognition that the potential consequences should demand.  From your understanding of the food business, do you think either of those groups should be doing more to prepare for these potential drought related issues?


    Of course, the problem is that somehow, this issue got political ... and actually acknowledging the issue, and cooperating while dealing with it, has become a lot more difficult because it has become about ideology.

    On the subject of the continuing email controversy, one reader wrote:

    One of our young salespeople relied on an e-mail she sent to our administrator asking him to follow up on an urgent matter.

    The administrator didn't follow up and when things turned ugly the salesman challenged, saying "Bill! I sent you an email ". Bill's response---" Mail is mail--- if it's important call me".

    Lesson learned.

    I'm afraid that the lesson I take from this may be different from the one you intended.

    Because I think Bill has a lot of blame here. He should read his emails and texts. That's how people communicate these days. Sure, maybe the salesperson should have made a call ... but unless it was explicitly explained in advance that Bill doesn't pay attention to email and texts, then how would the salesperson know?

    And if Bill doesn't pay attention to email and texts, then Bill is soon going to find himself to be irrelevant. Fifty years ago, would he have said, if it is important, don't phone me ... come to my office"?

    On the same general subject, MNB reader Mark Raddant had a thought:

    To answer Senator Graham's question about what not ever sending an email makes him: too out of touch to be President.

    Which puts him in the same position of most of the career politicians: people who have had teams of people running their lives for them for so long they don't know what the rest of the population's lives are like.

    What I find really scary is that people who don't send email and don't personally use the internet may actually be casting votes on things like net neutrality and digital infrastructure spending. Which means they're responding to lobbyists' dollars, not any actual knowledge.

    It always has made me crazy when going to Reagan National Airport in DC, and seeing reserved spaces for members of Congress. I always think that they'd vote differently about things like airport infrastructure if they had to deal with the same crap everybody else does.

    On new federal mandates for seafood tracking, one MNB reader wrote:

    So we are going to be able to track wild fish but we still don’t track cows, and we still struggle with cantaloupes, which would seem somewhat easier to track.

    As usual we CAN do things but it all depends on the lobbying power to decide if we actually WILL. For a while.

    From time to time I like to remind people that legislation and regulation rarely lead – they follow. Mandatory seat belt laws came after it became obvious we needed to buckle up for everyone’s safety. Same with child seats, smoking restrictions, efficiency standards, and clean water and air regulation.

    Public opinion (aka “customers”) want food transparency. Anyone notice the growth of organics? Manufacturers are all over themselves now cleaning up their ingredient labels.

    Lead, follow, or be prepared to be pushed out of the way. Not in a day or a month or a year – but soon.

    Yesterday's Eye-Opener looked at two CEO statements that I found to be wanting.

    One was in a Crain's Chicago Business story about Aldi's broadening assortment and appeal. At the very end of the piece,Ken Diehl, CEO of the Strack & Van Til Food Market chain, is quoted as saying that indeed, Aldi is a tough competitor. And here's the comment that grabbed my attention:

    “Aldi's low prices do seem to be resonating with certain customers.”

    My feeling was that this vastly understated Aldi's appeal and focus ... and this could be a competitive mistake if he actually believes it.

    One MNB user responded:

    Amen, on the Aldi's story and their current marketing plan. They have found a perfect niche for now.

    Aldi Stores are a much different and very much improved than in past years, in my opinion. There customer counts show it too.

    From another reader:

    First, your reporting about Ken Diehl’s comments made me think about Clayton Christensen’s “The Innovator’s Dilemma”.  For folks who may not be familiar with Strack & Van Til, they are the Winco of the Midwest – they were the disrupters years ago (and to a certain degree are today as they are not open on Sundays – or at least did not used to be – due to their religious beliefs) in the grocery space and, his comments reflect on what Aldi used to be (although to be fair, even in the late 1980’s Aldi still had BMW’s in their parking lots) in terms of just being a price operator.

    If retailers today are still treating Aldi as “just a low price, limited assortment, own brand only” operator, they are going to lose – as Aldi has taken a page from Trader Joe’s playbook about innovating – but while TJ’s innovates to the mid- and higher end consumer, Aldi is innovating for the lower to mid consumer.  All consumers aspire to something more than what they can currently afford – and Aldi has tapped into that by creating products that exceed expectations – five years ago the expectations were more modest but today I can say with confidence that Aldi is focused on creating products (still private branded) that look more like things Safeway, HEB and even Wegman’s might create.
    If Mr. Diehl does not yet see them this way – then indeed Strack is in for a bit of a fight as they are no longer the Innovator – and may want to sharpen their approach.

    The other quote I opined about came from John Clougher, CEO for Haggen in the Pacific Northwest, who said that the grocer studied the prices at the Safeway and Albertsons stores it is converting and hopes not to "disrupt the apple cart.”

    While I noted that he was just talking about pricing, I wrote:

    For Haggen to succeed, I think, it will have to present a really, really good reason for people to give them a shot. And I'd worry, if I were them, that any governing philosophy that looks to keep the apple cart rolling - to do business as usual - simply won't be the kind of game-changing strategy they need it to be.

    Prompting one MNB reader to write:

    I think you should remember that Haggen is not entering its new markets from ground-zero.  Multitudes of Vons and Albertsons shoppers will suddenly be introduced to the chain when the name-on-the-door changes at their regular supermarket.  Job #1 is to assimilate as many of those customers as possible by "keeping the apple cart rolling" before they even think about wooing shoppers away from other chains.

    A fair point. But I'll stick to my guns on this one - I'm in an apple cart-flipping mood these days, and I think that if Haggen is going to be anything more than a me, too option (and I think it needs to be, for this thing to work), it has to be something different, and communicate that every hour of every day.

    KC's View: