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    Published on: April 28, 2015

    by Michael Sansolo

    Let’s get this out of the way: I’m not a scientist ... despite a brief and mediocre attempt to major in chemistry in college.

    Here’s why I say that: it seems that the phase “I’m not a scientist” is the single most important starting point for tons of really important discussions.

    And that’s terrible.

    Let’s quickly review a couple of recent stories here in MNB. On Friday Kevin shared the clip from "The Daily Show" that took a completely unexpected turn on GMOs and the selective use of information to form positions.

    Yesterday we had two stories: one on Chipotle’s commitment to GMO-free products and another on Diet Pepsi dropping Aspartame as its sweetener.

    So let me repeat again: I’m not a scientist and in likelihood, you aren’t either. But it’s becoming increasingly clear that the food industry is square in the middle of many scientific debates. At some point we’re going to have to figure out a way to engage and possibly, horror of horrors, actually talk about science.

    Let’s share a couple of other items here.

    This Sunday, the New York Times ran an opinion piece titled: “How I got converted to GMO food,” written by a one-time anti-GMO activist who changed positions after seeing the environmental and societal benefits of GMO products in poorer parts of the world.

    Here’s the issue: the arguments author Mark Lynas offered in the Times probably won’t change a single mind on the issue. As he pointed out, some recent Pew Research found a larger gap between scientists and the public on GMOs than any other issue.

    For context: there is an 18-percentage point gap in scientists supporting vaccinations and the public perspective and a 37-point gap on climate change. On GMOs the gap is 51 points.

    So we’re not scientists and we don’t believe scientists either.

    The same discussion could extend to Pepsi’s decision.

    Full disclosure: I do work with the Coca-Cola Retailing Research Councils, but not on soft drink or competitive issues.

    The Washington Post reported Monday that there is no scientific evidence to support claims of problems with aspartame. That’s the finding of the National Cancer Institute, the National Institutes of Health and the European Food Safety Authority.

    Even Pepsi, the Post noted, said there was no scientific reason for its change of sweetener, but clearly Pepsi is hoping the change will tamp down controversy and boost sales.

    Late night host Jimmy Kimmel has lampooned the lack of general science knowledge with recent segments showing consumers who are passionately against GMOs or gluten - without really knowing what the letters GMO stand for or what gluten actually is.

    (You can watch the Jimmy Kimmel GMO video here, and the gluten video here.)

    So here’s the thing: my column won’t change a single mind. Today we’re armed with information that both convince and support each of our specific opinions on GMOs or any other issue. And every day these issues push deeper into the public square. For that reason the industry can’t simply give up.

    Somehow, someway we need to engage this discussion to help spread some understanding, some education and maybe some willingness to open minds.

    Even if it involves science.

    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: April 28, 2015

    by Kevin Coupe

    John Oliver nailed it again.

    On Sunday's "Last Week Tonight" show on HBO, Oliver took a look at how retailers - including Walmart and Gap - essentially enable the manufacturing of low priced clothing in nations where people (including young children) are paid a pittance to make products shipped to the US.

    His point is that while retailers say they are doing their best to avoid such situations, the record shows persistent abuses for which retailers, in the final analysis, have to take responsibility.

    As always, Oliver is funny, pointed, and a little profane ... and he makes his points with a unusual clarity about a subject that too few are addressing.

    KC's View:

    Published on: April 28, 2015

    Kroger announced yesterday that it will acquire most of dunnhumbyUSA from the Tesco-owned United Kingdom-based analytics firm, a move that is said to give Kroger greater flexibility and give Tesco the ability to sell off dunnhumby as it looks to reduce costs and raise cash.

    The announcement says that "under the new arrangements dunnhumby Ltd and Kroger will replace their existing exclusive joint venture with a new long-term license and service agreement and the acquisition of certain assets from dunnhumbyUSA by Kroger. A new business called 84.51° will operate with those assets as its foundation." (The name that comes from the longitude of the new entity's location.)

    Under the new arrangements, the companies say, "Kroger will retain dunnhumby Ltd’s technology and the talent to continue developing Kroger’s leading customer insights and loyalty programs for the benefit of its customers ... In addition, 84.51° will have the flexibility to accelerate future innovation by working with new partners and new tools, always toward the goal of engaging customers where, when and how it matters most to them. Where previously Kroger was restricted to working with dunnhumby only, the new non-exclusive arrangement now makes available to 84.51° the use of innovative tools from other companies to analyze its data.  84.51° will be an innovation engine, focused on rapidly developing customer science, analytics and insights to bring new solutions to market to support Kroger, consumer packaged goods companies, and other partners."

    Bloomberg reports that "the new company will still use Dunnhumby’s analytical tools under a licensing agreement, yet Dunnhumby will no longer have access to Kroger’s customer data, Kroger said. Dunnhumby will now be free to pursue new business opportunities with other U.S. retailers and consumer-product manufacturers without Kroger’s involvement. Financial terms of the new arrangement were not disclosed."

    Stuart Aitken, who previously led dunnhumbyUSA, will become chief executive officer of 84.51°.

    According to the Cincinnati Enquirer, "About 500 former dunnhumbyUSA workers – including more than 450 locally – will become employees of the independently operated Kroger subsidiary and Kroger will assume ownership of its newly constructed headquarters" in downtown Cincinnati.
    KC's View:
    There is no question that dunnhumbyUSA has been an enormously effective strategic advantage for Kroger, and I'd have to guess that this move is designed to give it even greater competitive mojo. In the end, it is the ability to be granular in data acquisition and analysis ... and then act on that knowledge in an effective way ... that is the thing that will give modern retailers the ability to create relevant and sustainable business models.

    Every retail should take note.

    Published on: April 28, 2015

    In Des Moines, Iowa, KCCI-TV News has a story about how Hy-Vee is rolling out its new Hy-Vee Aisles Online service in select stores.

    "Here's how it works," the story says. "You find the products you want in the online store and complete the order, next an employee walks the store and grabs the items you want. A hand-held computer tells the employee exactly where to find your items in the store.

    "Hy-Vee says that so far the average order has about 30 items and takes a worker about a half hour to shop for you. The items are scanned, loaded up and arrive at your front door. You can fill out an online form with the groceries you need and where you want them delivered.  Or you can set a time when you want to pick them up at the store."

    Delivery costs $4.95 per order, and pick-up costs $2.95 per order, with the charges dropped for orders of $100 or more.
    KC's View:
    As Jimmy Durante once said, "Everybody wants to get into the act."

    (If you don't know who Jimmy Durante is, keep it to yourself. And try using Google. Hint: He sings a couple of songs in the soundtrack of Sleepless in Seattle. If you've never seen Sleepless in Seattle, keep it to yourself. And try using Netflix. One of those songs earlier was in Casablanca. If you've never seen Casablanca ... well, you get the idea.)

    The goal at Hy-Vee and every other retailer has to be to create a service that is seamlessly integrated into the traditional business, and that makes it relevant to a changing consumer population.

    Published on: April 28, 2015

    The Wall Street Journal has a story about how, in 20 years, technology will allow grocery shopping to be "effortlessly integrated" into people's daily lives, and won't be seen as a chore by shoppers.

    "The digitization and merging of your personal history, food preferences, ingredient information and health data will take the guesswork out of the shopping experience and put consumers in the driver’s seat," the Journal writes. "It will press food suppliers and retailers to be more transparent with customers who enter a store - online or off - with more knowledge than ever before; it will help you make better and healthier food choices; and it will enable you to discover new products you love based on your personal needs at every stage of life ... One touch of a screen will allow food retailers to be completely synced with your life, working harder than ever for you, and allowing you to make better, easier and more exciting choices for you and your family."
    KC's View:
    This all sounds great ... but I would caution retailers not to assume that the integration of technology into their business models will not automatically make shopping more fun. It doesn't work that way. Technology can be a means, not an end.

    Published on: April 28, 2015

    CNBC reports that AB Acquisition, the holding company that owns Albertsons and recently completed its purchase of Safeway, "has hired bankers to plan an initial public offering for later this year," one that could raise more than $500 million.

    The timing is said to be fluid, with no final decisions having been made. Brian Dowling, a spokesman for AB Acquisition, tells CNBC that the company does not "comment on rumors."

    The story notes that "AB Acquisition is controlled by an investor group led by Cerberus Capital Management, which also includes Kimco Realty, Klaff Realty, Lubert-Adler Partners and Schottenstein Stores."
    KC's View:
    Why not? Albertsons-Safeway is the nation's second largest supermarket company. Going public would seem to be the natural next step.

    Not necessarily the step that will make it more connected to Main Street and its customers, but certainly the step that will make the investor class happy, at least in the short term.

    Published on: April 28, 2015

    The Washington Post this morning reports that Amazon is launching Amazon Business, described as "a new marketplace where business shoppers can buy millions of items ranging from everyday office supplies to massive equipment such as industrial deep fryers or tractor parts. Businesses will be able to register for Amazon Business for free and will receive free two-day shipping on orders costing more than $49."

    The story goes on: "The new offering may not seem as flashy as some of Amazon's other recent efforts, such as the expansion of same-day and one-hour delivery or the pilot of the Amazon Dash, a gadget for your home that allows you to restock on essentials with the press of a button.  But it's arguably more consequential: The business-to-business market is massive, and this is a sign that Amazon is now making a big play to corner it.

    "Amazon says millions of business customers have purchased billions of dollars of goods on the regular site in the past year."
    KC's View:
    The important thing about this announcement is that it points out how easily Amazon can slice and dice its traditional business to make it relevant to a different customer segment.

    Want a business-oriented marketplace? Want a marketplace for GMO-free foods? Or gluten-free foods? or made in the USA products? It is all a matter of coding ... and then targeting potential customers based on information already compiled from purchases already made.

    This is an enormous advantage.

    One quick additional note, if I may. I talk a lot here about Amazon, and yesterday I got an email from an MNB reader asking how much stock I owned in the company.

    The answer is none. Never have. If I did, I'd tell you. (Not that a mention on MNB is going to affect the stock price. I wish.)

    Though, to be honest, I have had moments when I've wondered how my life would be different if, for every dollar I've spent on Amazon or on Apple products, I'd also invested a dollar in their stocks.

    Published on: April 28, 2015

    In Ireland, the Independent reports that Tesco's business there overstated its profits last year by the equivalent of about $98 million (US). The reason, according to the paper, is $96 million (US) in supplier payments to the company that were "incorrectly" booked as profits.

    According to the story, "Irish suppliers to Tesco have long complained privately about the payments demanded by the retailer to stock their products. The latest results statement gives the first indication of the extent of these payments. It also seems to show that payments from suppliers to Tesco Ireland are far higher than those demanded by its UK parent."
    KC's View:
    If these numbers are correct, it suggests that Tesco is a prime example of a retailer that is making money on the buy rather than on the sell. If these numbers are correct, it certainly gives us some idea of how Tesco may have lost its way. Demanding these kinds of payments from suppliers cannot help but create a corrupting influence on how a retailer does business.

    Published on: April 28, 2015

    Wired has a story about car service Uber rolling out UberEats in New York and Chicago, following what it calls successful tests in Los Angeles and Barcelona.

    According to the story, "For this new feature, Uber partners with local restaurants, which offer one menu item per day to Uber customers ... The big difference from other app-based food delivery services is how quickly Uber says it will get you your grub: the company promises to use its mighty network of drivers to deliver your order in 10 minutes or less."

    While getting around New York or Chicago in 10 minutes would seem to be an impossible task, Wired says that "the trick is, rather than waiting for customers to place an order, waiting for the restaurant to make the order, and then battling traffic to deliver the order - a process that can easily take 45 minutes - Uber drivers pick up batches of orders from participating restaurants in temperature controlled bags. Then they drive around as they always do, waiting to make a delivery to the nearest willing customer."

    The driver gets a $3 delivery fee per order.

    Jason Droege, who is described by the magazine as heading up "all of Uber’s so-called Uber Everything experiments," tells Wired that this move "is yet another way that Uber is flexing its muscles not just as a transportation powerhouse, but as a full-scale logistics company. 'We’re trying to build products at the intersection of where your lifestyle meets logistics,' Droege says."
    KC's View:
    I am dubious. Sounds like a recipe for a lot of wasted food to me.

    But when it comes to these kinds of innovations, I tend to give the companies the benefit of the doubt ... if only because I try desperately not to be guilty of epistemic closure.

    Maybe this won't work. But if it does not, history suggests that the folks involved will learn something from the experience, something that can be put to work in developing future concepts that will.

    Published on: April 28, 2015

    As reported yesterday in the MNB PM Update...

    Minnesota-based Lund Food Holdings announced this morning that it will bring together its 27 stores operating under either the Lunds or Byerly's banner as one unified retail brand - Lunds & Byerly's.

    The first official rebranding of a store will take place in Woodbury, Minnesota, this Thursday, with a rollout to follow. According to the announcement, "Beginning April 30, customers will see new employee uniforms, name badges, grocery bags and more at every Lunds & Byerly's store. New storefront “Lunds & Byerly's” signage will be installed at every location by the end of May."

    Lunds acquired Byerly's in 1997, and the two chains have blended many of their operations over the past two decades, including training, procurement and product development. Private label products bearing the Lunds & Byerly's name began appearing in 2004, and the two chains combined for a unified website in 2006.

    CEO Tres Lund called it "a natural next step to combine our names as yet another exciting evolution of our brand."
    KC's View:
    In some ways, I'm tempted to say that it is about time ... for my own purposes, I've always sort of thought of the two retail brands as co-joined. While Lunds stores often had a distinct brand image from Byerly's, this simply makes sense ... it probably will save some money down the line, and formally brings together two Twin Cities icons that many people thought of as partnered anyway.

    I will say this. I've always thought that the Lunds and Byerly's stores - whether considered as one, or separately - are among the best reasons to live in the Minneapolis/St. Paul area. They're great stores, with a food-first approach that I find tremendously appealing. If this serves to make the company more sustainable, accessible and successful, then I'm all for it.

    Published on: April 28, 2015

    GeekWire reports that last Friday's computer outage at Starbucks - which put its checkout systems offline and made it impossible to ring up sales at stores throughout the country - cost it "millions of dollars" in sales.

    The losses come in the form of lost sales when stores closed early and free coffee given away by stores that were open but unable to ring up sales.
    KC's View:

    Published on: April 28, 2015

    ...will return.
    KC's View: