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    Published on: May 27, 2015

    by Kate McMahon

    A new study of Americans' evolving attitudes on when, where and how they shop confirms statistically what we at MNB have seen anecdotally.

    In addition to customer service, it’s all about the smartphone. And those shopping apps are just as important for brick-and-mortar stores as for e-commerce giants in the battle to win and keep consumers.

    The survey from the design firm King Retail Solutions (KRS) queried 1,200 consumers and found that 51 percent have one or more shopping related-apps on a smartphone, and that majority will only continue to grow.

    Not surprisingly, more women have smartphones and shopping apps than men. And among demographic groups, the Millennials lead in both categories, followed by the Gen X-ers and then the Baby Boomers.

    But the important takeaway is how and where shoppers are using the apps. The survey found 47 percent of consumers used apps that represent the leading specific retail and e-retail brands – such as No. 1 Amazon, No. 2 eBay and No. 3 Target – for shopping both online, on the phone and in the store. An additional 14 percent of shoppers solely use their apps for in-store shopping -- meaning a total of 61 percent refer to their smartphone for in-store shopping – a development that should spur brick-and-mortar retailers into action.

    “Investing in functional, helpful, even delightful proprietary shopping apps is clearly no longer a fad to humor, but instead a significant tool to employ for increased in-store sales,” the study concluded.

    I would agree. My Millennial daughters are constantly comparing price and quality on their omni-present smartphones before making a purchase in a store or online. I fall squarely in the less-technologically savvy Baby Boomer group, and still find my contemporaries also donning their reading glasses in the supermarket, wine store or other shop to do pre-purchase research.

    KRS executive vice president Andrew Swedenborg says that “retailers today are being asked to spin a lot of plates when it comes to maintaining and, more importantly, adding to their relevance with shoppers. People are shopping everywhere they’re plugged in.”

    The study also confirmed that consumers placed quick, friendly service from a knowledgeable staff as the most important factor in feeling delighted or otherwise impressed with their retail experience.

    Clearly, the challenge is combining superior front-end customer service with enhanced mobile technology - and quality and price – to differentiate your brand. And being nimble enough to anticipate the next must-have app.

    The KRS study also addressed “category blurring” in the area of groceries, fresh meals, and services such as haircuts or medical care – or one-stop shopping for soup, sundries, a buzz cut and a flu shot.

    Some 61 percent of shoppers reported purchasing fresh-prepared meals from a non-restaurant, with Walmart, Target, Kroger, Albertsons/Safeway and Whole Foods in the top five. Yet grocery and fresh-prepared food lag behind apparel and electronics in the purchase online for in-store pickup category.

    And therein lies an opportunity. If you’re selling freshly prepared meals, and your targeted mobile technology lets customers know about daily specials and seasonal offerings, that’s a plate worth spinning.

    Comments? As always, send them to me at .
    KC's View:

    Published on: May 27, 2015

    by Kevin Coupe

    Schenectady,New York-based Price Chopper has made an interesting marketing move ... the sponsorship of a Pandora radio station featuring music to which one can barbecue.

    Pandora, for the uninitiated, is an online and free music service that offers themed stations. On my Pandora list, for example, there is everything from "New Orleans Jazz" to "Cajun and Zydeco" to "Frank Sinatra" and, of course, "Jimmy Buffett." All of these streaming stations are sponsored, though one has the option of paying a small fee to skip the commercials.

    In Price Chopper's case, the station it is sponsoring is the "House of BBQ," and it features a mixture of old and new songs from the likes of Luke Bryan, Keith Urban and John Mellencamp ("Jack and Diane" is playing as I write this).

    It is a great example of finding unusual ways to reach out to consumers ... though in the case of Price Chopper, its message may resonate less to people who don't have one of its stores anywhere nearby. (Like me.)

    But I do think that it shows a willingness to think out of the traditional box, and to find new ways to connect with shoppers. Which is, in my opinion, an Eye-Opener.

    KC's View:

    Published on: May 27, 2015

    Yesterday, MNB took note of a Fortune story that looked at how "Big Food" companies are losing relevance with consumers "who are interested in authentic companies that make real food rather than behemoths that manufacture products loaded with ingredients that few people can pronounce."

    Now, Advertising Age is out with a similarly themed piece, writing about "how the food industry has been shaken from its core, forced to reinvent itself in the face of shifting consumer demands. Families once reliably heaped their plates with products such as Stove Top stuffing from Kraft Foods, Hamburger Helper from General Mills and Kellogg cereals, along with similar products from other processed food titans. But now those consumers are increasingly migrating to smaller, upstart brands that are often perceived as healthier and more authentic.

    "Quite simply, big brands are losing one of their most valuable assets: consumer trust. And the fight to regain it will shape the industry for years to come."

    You can read the entire story here.
    KC's View:
    I continue to believe that this is a story and a trend that must be taken seriously by people at every level in the food industry. It is about relevance, authenticity, trust ... all the things that are absolutely critical to establishing a relationship with consumers.

    It also goes beyond which brands are going to be trusted by shoppers, though this will be the low-hanging fruit to which most people will migrate. I also believe it could have an impact on which stores are trusted by shoppers, and will extend to the demands that consumers will make of the brands they buy and the stores they shop.

    It also will have an impact on issues of traceability, trackability, and transparency - because these will be required of the brands and stores that want to remain relevant and effective. You have to be willing to tell people what is in their food, where that food comes from, and be able to act on a moment's notice if questions are raised about a product's safety.

    This is, in my view, huge. It reflects the shifting balance of power from businesses to consumers to which every business must pay attention. And in the macro sense, it could be a generational and transformational issue for the food industry.

    Ignore it at your own risk.

    Published on: May 27, 2015

    The New York Times reports that Elmo, Bert and Ernie, and Grocer are getting into the cookbook business.

    According to the story, “'Sesame Street Let’s Cook!' offers simple and healthful recipes that may be the first step toward convincing even your pickiest eater to try something new. The recipes, created by Susan McQuillan, a family nutritionist and food writer (in collaboration with all the Sesame Street muppets of course), offer a child-friendly approach to cooking and eating. Familiar family dishes include Elmo’s Mac ‘n’ Cheese ‘n’ Bits and Grover’s Monstrously Delicious Chicken Nuggets, as well as more adventurous fare including Grover’s Asian Sticky Rice Balls and Zoe’s Tortellini Soup with Tiny Turkey Meatballs."

    McQuillan tells the that "the idea is that every recipe has steps marked for kids. The goal is to get kids involved in cooking from scratch with the longer term goal of eating better. A two-year-old who hands you a spoon or stirs something feels involved in the process. Even with picky eaters, the idea behind it is that if they participate in the making of the food, or at the supermarket choosing the foods or even just choosing the recipes from the book, they’re more inclined to eat the food."
    KC's View:
    It is just so heartening to see "Sesame Street" getting more and more involved with the nutrition issue - first through its partnership with the produce Marketing Association (PMA) that is allowing brands to use its familiar characters to market fresh foods and vegetables, and now this.

    Published on: May 27, 2015

    As Fairway Markets announced yesterday that its 2015 Q4 sales, same-store sales, and same-store customer transactions were down, it looked to distract attention from the company's continuing decline with news about a new and smaller store format.

    Jack Murphy, CEO at Fairway, said in a prepared statement, "We are excited about the announcement of the new Fairway Market located in a densely populated submarket with ample parking in a dynamic section of Brooklyn. This location will be the prototype for our new store model. It will have a smaller footprint and lower cost structure than our existing stores with the same broad offering of fresh, specialty, organic and conventional products.

    "We expect to further improve the profitability of the store by optimizing space allocations between departments based on learnings from recently conducted productivity studies. We have also spent a lot of time designing a more capital efficient store and believe that we can build this store with a lower cost per square foot than our existing locations. We will continue to remain focused on searching for high quality locations which we believe will be accretive to our long term growth strategy."
    KC's View:
    It's funny. I swear, yesterday morning I was jogging by a now-closed automobile dealership on the Boston Post Road in my town, and I thought to myself that if another car company does not go in there, it'd make a great site for a food store ... and I actually thought to myself that it'd be an interesting place for a smaller format Price Chopper or Fairway.

    There's no question, it seems to me, that regardless of the size of its stores, fairway has lost some of the magic that seemed to infuse the company when it was being run by the founding Glickberg family. It's gone through an investment by a private equity group and an IPO, and somehow seems to have lost the momentum that made it such a hot format for so long.

    I'm not sure a small format is the solution ... at least not if it represents a financial calculation as opposed to a consumer-driven marketing move.

    Published on: May 27, 2015

    The Chicago Tribune has a piece about John Mackey, founder and co-CEO of Whole Foods, in which he talks about the company's roller-coaster stock performance. The story notes that "Whole Foods stock has rebounded since last fall, but that follows a dramatic one-year decline amid analysts’ fears: too much competition, from established grocers as well as upstarts; overeager expansion; too many downward revisions of earnings forecasts."

    Mackey says that he’s unfazed: “The market is manic-depressive. Bipolar. It tends to get overly enthusiastic about you at times. Other times, it thinks your whole concept’s doomed, and it bids the stock down. We’ve been public a long time. I’ve seen this before.”
    KC's View:
    What Whole Foods hasn't seen before is a plethora of competition - from traditional retailers such as Kroger and upstarts such as Sprouts - that threaten its longtime domination of the healthy food category. Which is why the company seems to be trying lots of different things - loyalty marketing, Instacart, a less expensive format - to recapture its mojo.

    Published on: May 27, 2015

    The Wall Street Journal has a piece about how Coca-Cola may be taking a bit of a risk as it "prepares to assume 16.7 percent" of Monster Beverage Corp., a company that recently has "settled two wrongful-death lawsuits, and another suit involving the death of a 14-year-old could reach a jury this summer. It faces at least five product-liability lawsuits."

    The story notes that "the Food and Drug Administration is investigating whether energy drinks are riskier than other caffeinated products. A civil case against Monster by the San Francisco city attorney is scheduled for trial in February. The New York state attorney general has alleged in an ongoing investigation that Monster paid college 'ambassadors' to encourage underage freshmen to mix Monster with alcohol and supplied company-branded funnels for rapid consumption."

    Monster maintains that all the legal challenges and investigations are without merit, and that its drinks are safe.
    KC's View:
    Monster hardly is alone in an energy drink category that has had questions raised about safety and litigation aimed at holding companies responsible for deaths and injuries.

    I know this. I have told all my kids that I don't want them drinking this stuff, that I am utterly convinced that there are all sorts of dangers in these products lurking below the surface. I think that while energy drink companies claim that they don't encourage mixing them with alcohol or consumption by young people, it is with a wink and a smile, because they know that's where a lot of their appeal lies.

    And I think Coke potentially is playing with fire as it completes this acquisition.

    Published on: May 27, 2015

    • The Wall Street Journal reports that Amazon "is prepping a marketplace for artisan goods it is calling Handmade," designed to compete with Etsy, a growing site with a similar mission.

    The story says that Amazon has been propositioning Etsy sellers directly, offering them access to a test site for handmade.

    "Amazon’s new site could present a new challenge for Etsy, whose stock has fallen about 43% since the close of its first day of trading last month," the story says. "Unlike Amazon, Etsy doesn’t have its own Prime loyalty program, nor does it oversee a shipping network to expedite deliveries.

    "Still, Etsy’s 3.5% commission and 20-cent listing fee are potentially much less expensive than Amazon’s cut. Today, Amazon’s commission varies depending on the product sold, but for many categories it charges sellers a 15% fee on the price of each sale."

    • Deutsche Bank Securities is out with an analysis suggesting that UK-based online retailer Ocado could be looking for a US food retailer with which it could partner to bring its service to American shores.

    The report offers a rationale for such a deal: "For a U.S.-based food retailer looking to launch an ecommerce business, partnering with Ocado has several advantages. First, Ocado would put up a large portion of the capital in exchange for a one-time set-up fee and a commitment of at least 3 years (which would include variable fees tied to sales). Second, Ocado would handle ongoing maintenance of the equipment (reducing ongoing labor and other expense). Third, Ocado would be responsible for integrating all systems and for software updates. Fourth, partnering with Ocado would provide a first-mover advantage, which is especially critical given that the market is likely to shift more towards online in the future."

    And, Deutsche Bank notes, Ocado has been public about its desire to partner with global retailers and expand its footprint.
    KC's View:

    Published on: May 27, 2015

    The Conference Board is out with its monthly Consumer Confidence Index, saying that it rose to 95.4 in May, up from a revised April number of 94.3. While the index was up for May, it was a little lower than the 96.1 that had been predicted by analysts.

    According to the CNBC story, "Consumers' optimism about the short-term outlook was mixed in May, however. Consumers who said business conditions are 'good' fell to 25.2 percent from 25.5 percent, while those claiming conditions are 'bad' also decreased from 19.2 percent to 17.4 percent.

    "The reading on jobs was also mixed. Those who said there were a lot of jobs increased to 20.7 percent from 19 percent. However, those who claimed jobs are 'hard to get' rose to 27.3 percent from 25.9 percent."
    KC's View:

    Published on: May 27, 2015

    • The Omaha World-Herald reports that "six value-oriented Omaha-area grocery stores — four No Frills stores and two Bag ’N Saves — will have a new name and new, more upscale features when Michigan supermarket operator SpartanNash completes $15 million of renovations this summer.

    "The transformation to the Family Fare brand includes sushi bars, Starbucks kiosks, dedicated organic and natural foods sections, expanded deli counters with panini bars, wider craft beer selections and a store loyalty program ... the changes at the future Family Fare stores are designed to give the stores an edge in a highly competitive grocery market that’s seen new brands such as Walmart Neighborhood Market and Natural Grocers take market share from existing stores."

    Bloomberg reports that Taco Bell is looking to appeal to millennials by cutting "unnatural" ingredients: "Taco Bell will remove artificial colors and flavors, high-fructose corn syrup and trans fats from 95 percent of its menu by the end of the year, Brian Niccol, the chain’s chief executive officer, said in an interview.

    "The upgrade won’t result in higher prices."

    • Beech-Nut Nutrition Company announced that "it has listed the percentage of each ingredient for all of its jars and pouches on its web site," saying that it "is the first U.S. baby food company to provide this information to parents ... n the foods section on the Beech-Nut website, parents can click on any individual product to reveal its nutrition panel. This panel now features a percentage breakdown of each ingredient."

    • The New York Times reports that Hormel Foods is acquiring Applegate Farms, described as "a maker of natural and organic meats," for about $775 million." The deal is Hormel's largest acquisition ever.

    • Whole Foods has announced that it plans to offer up to $1 million in emergency no-interest loans to small businesses damaged by severe floods along the Shoal Creek in Austin.
    KC's View:

    Published on: May 27, 2015

    MNB yesterday took note of a Washington Post story about how France, "in an effort to reduce food waste," has made it illegal for supermarkets to throw out food "considered edible," forcing them instead to donate it to charity or make sure it is used for animal feed.

    One MNB user responded:

    Good. But this is America. You can’t tell us what to do ;-) 

    Our stores compost. Our offices compost. We donate scratch & dent fresh produce to various places from soup kitchens to farmers to even a local wild life rehab. We plan what we produce in our delis to limit waste without impacting sales. We recycle. We build ‘green’ stores. We run alternative fuel vehicles. We offer car charging stations. We use native landscaping and even grow food at one of our locations. Plus, we build human-scaled stores that will have a life after our grocery business if we choose to pull out.

    Frankly, I’m disgusted that multi-billion dollar grocery corporations in our country are not also doing or that it’s not required by our country. It’s the right thing to do and if we can do it with our 50 million dollar organization certainly the national chains can figure out how to do it. There’s no excuse anymore. None.

    And from another:

    Not sure what the position of the food industry is currently but at one time supermarkets were concerned about donating food because in the event of illness, or even "made up" illness they could face lawsuits.

    I saw a lot of perfectly good perishable food thrown out. I thought it was a shame then and still do if it's still a policy in some places, however I think that may have changed by now.

    And another:

    As a Food Broker, I am astounded at the waste factor.  We have local chains that throw out enormous amounts of food from their grab-n-go sections as well as the buffet-style service department because of the legal implications associated with giving it away.  The legalities are what we need to address.

    On the subject of corporate - and corporate executives' - responsibility when there are food safety issues, MNB user Jessica Duffy wrote:

    I like that “criminal intent” is not necessary for a conviction…that sloppy production practices and bad training are to be held accountable as well. If lack of conscientious cleanliness procedures makes people sick, then that company should be made to pay, because they are betraying the trust of their customers.


    On the subject of an increase in the minimum wage and wage disparity in the US, MNB user Chuck Jolley wrote:

    The continuing effort by those that are against any kind of increase in the minimum wage – if $15, why not $30 – is ridiculous.  I’ve always rejected logical absurdity arguments as silly and counter-productive. And no one questioned the rapidly increasing cost of labor when all those extra profits were going to the front office.  It was just the necessary cost of doing business.  Now that our labor force, meaning the men and women in the trenches, have become much more productive and capable of turning out much more product per man/hour and, therefore, less of a real cost, why are lost profits suddenly becoming an issue?  BTW, checking inflation against my first minimum wage job in 1965, the current minimum should be at least $12.50.  Add on the vastly increased productivity of an average worker during that half century and maybe that $30 isn’t so ridiculous.

    From another reader:

    I worked at a CPG company and every year would get my budget for employee salaries. Many many years we had to deliver a message to my region sales personnel that raises would only be 2% or some times no raises. There would be a communication from or CEO about the company's performance not being what what we needed, committed to or below our peer competition performance therefore salary increases would be impacted.

    As the sales leader for my region I would have no problem delivering such news especially when we did not hit targets or were out performed by competition.

    However, inevitably the timing of the news of raises came out with the announcement of executive pay the message got clouded by the announcement the our CEO base salary was going up by twice as much as the regions percentage in pay increase and her total comp package (bonus and options) would be going up even more.

    Obviously, it made our job more difficult trying to get our region's sales people to understand why their performance was being tied to company's performance but our leader's comp was not?

    That is why I love companies like Costco that seem to understand what is good for the goose is good for the gander.

    To be honest, it is my suspicion that this scenario is typical of more companies than not. Which is awful.

    From another reader:

    One of "Your Views" comments on the move to higher wages referred to wage increases being "socialism".  It is not; it is a movement by workers who are in this country—still allowed to organize and protest conditions.

    The "socialism" aspect is actually more like reverse socialism in that they companies paying low wages socialize the cost of filling in the economic gap between wages and needed costs like food and rent by relying on government to fill the gap.  That is socialism.  But the benefit: higher profits from reduced labor costs, is not social.  The benefit accrues to owners and shareholders of that profit.

    The cost of that benefit is socialized.

    On another subject, MNB user Larry Ishii wrote:

    I do not applaud Walmart for many things but I certainly have to tip my hat to them for taking a strong position to hire veterans. I agree with the comments of Chris Sultemeier relative to their very positive traits. Those traits are very conducive to building a strong and productive organization.
    But I also understand that once into management levels the military style of management techniques are not often effective in today’s work force – especially for millennials. These veterans deserve the best treatment and opportunities and I hope that Walmart will give them the benefit of excellent management training.

    Got the following email from MNB reader Lisa Bosshard about a certain e-commerce giant:

    I wasn't first on the Amazon train, but have thoroughly embraced it and here's insight into why....

    I work full time (full-time being 45+ hours weekly) and commute 3 hours a day.  My husband works 50+ hours weekly in addition to his 1.5 hour commute.  Between us, we have about 3 hours in the evening to grab dinner and prepare for bed leaving weekends to get everything done in our 'personal lives'.  What that looks like to us, is gym, grocery shopping, time with family and general house errands.  What we don't have time to do is shop and in particular go to stores to hunt, kill and drag something home.

    Perfect example yesterday; hubby needs a new wallet.  Pre-Amazon days, we would have headed to brick/mortar stores to shop killing a Saturday in the process.  First stop would have likely been JCPenny.  If nothing there to fit the need, would have headed to Kohl's or Macy's to find something.  If still nothing, Burlington Coat Factory and so on.   So, when this subject came up, hubby mentioned we needed to run around this weekend so he could shop for a new wallet.  I listened and then suggested he review Amazon first.  Last night, in 5 minutes, he found exactly what he wanted, at a price he was willing to pay and all with free shipping to arrive in 2 days.  WHAM, sold!

    In today's busy hustle of life, and in my humble opinion, it's not that Brick & Mortar stores aren't relevant, it's that busy families simply don't have time to shop (hunt, kill and drag it home).  Stores need to get with the on-line revolution quick, or get left behind.  I don't see anyone working less hours or commutes getting shorter.  Families have to cut somewhere or lose more family time.

    Finally, more comments about the "Millennial Mind"piece written last week by Portland State University student Chelsea Ware.

    One MNB reader wrote:

    First, I have to admit that I didn’t read Chelsea’s piece on Friday, but I am planning to do so shortly. That said, I did read the response from one of the fellow MNB readers that I thought was a bit off base. After the tailspin that McDonald’s has found itself in recently, I think that having patience with them is a bit myopic. I’m not saying I would never visit McDonald’s again, but I have no intention of taking my business there while they try to figure out what they’re doing. In the few visits I have had there in the past 6 months, I’ve ordered their more ‘premium’ items only to find myself wishing I had either saved the $5 or taken it to a Chipotle and gotten 2x the food with 10x the quality for $3 more.

    One specific point I specifically disagreed with was this reader’s sentiment, “It’s interesting to read how her generation makes assumptions about Brands based on a couple of experiences, rather than to understand what these Brands might be testing around the world.”
    Frankly, why wouldn’t I form an opinion about a brand based on my own few experiences? I don’t really care what McDonald’s is doing in Spain if the chicken wrap I buy in the U.S. leaves much to be desired.
    I think your previous reader may have missed the point. He/she is right… forming opinions once you have experience in the workforce is valuable. Having to go do the things you’re asking others to do gives weight to your experiences. That said, Chelsea’s (and my) generation will have more spending power than Boomers by 2017. A good business lesson would be to take Chelsea’s opinions and sell her what she wants to buy. You may not give her opinions much thought, but her $1 bill is worth the same as your $1 bill.
    As a note, I’ve been in the workforce for 5 years now, yet I have been looked at with some disdain for being one of the “entitled” generation. I’m hoping my fellow millennials and I can have some positive influence on our country (and economy) in the coming years, but know that it won’t be in the same way as previous generations. And that’s ok…

    From another reader:

    I LOVED what Chelsea wrote and love to see you featuring someone who is a young millennial. They are always the topic of conversation, however we rarely hear directly from them! I also loved that the topic was McDonalds – generational divides really become evident when talking about that place. I am a millennial but on the older end of the generation. I won’t feed McDonald’s to my toddler son. Period. In fact, when we drive by one he will say “yuck, that’s bad for you.” Have I brain washed him? Yes. Am I happy about that? Yes. I agree with everything Chelsea said and for me, a busy working mom on the go, I need solutions that make life easier AND help keep us healthy. I am not worried about the cost of food, I am worried about the quality and health benefits. I want to give my son everything I can, including a healthy start.
    The first commentator sounds like he’s had battles with his 20yr old son. I get it, my sister is 23. However, what really bothered me was his frequent mention of Social Security. I would be willing to bet that there are few millennials who wake up each day and are motivated to work so that they can pump money into SS. I can promise you I don’t. Honestly, I’ve always just operated under the assumption that all entitlements will be eliminated by the time I reach that age. My husband and I approach our 401Ks with the attitude that we need to save now to live like we want to later. It just another line item that comes out of my paycheck. Like taxes, it’s inevitable. I’ve accepted it and don’t lose any sleep over it.

    When Baby Boomers retire we will have higher percentages of people taking care of elderly parents, versus children at home. I have great respect for older generations, but, to be frank, the commentator sounds a little grouchy. No one hesitates to call Millennials the “me me me” generation, yet the idea that I need to achieve his standards of success to better fuel Social Security sounds a bit “me me me” too. To that point, what efforts are older generations making to learn with, educate and embrace younger generations? Sure, they don’t know everything but NO ONE DOES. We should ALL be open to learning at all times. It’s fair that he wants to see what Chelsea will say when she is out of school, but I’d venture to say her opinions won’t change. I am likely 10 years older than her and I agree with every word she wrote.
    My challenge to that commentator is this – what are you doing, in your own profession, to host a dialogue with other generations? Is you company engaging at the university level? Do they offer internal mentorship / leadership opportunities so that millennials can work alongside him. I hope he’s actively pursuing that engagement because, if not, then he is doing nothing to help foster knowledge sharing, learning and acceptance.
    Maybe he should hire Chelsea after she graduates….

    A lot of folks should hire Chelsea after she graduates.
    KC's View: