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    Published on: June 19, 2015

    by Kevin Coupe

    I'm a particular fan of commercials that communicate a sense of authenticity and don't take a hard-sell attitude - I think they tend to resonate to a greater degree, and give one a sense of how a product might fit into one's life, as opposed to just appealing to some level of acquisitiveness.

    Such an ad can be seen as part of the Dove's Men+Care campaign, in which the company offers a montage of men finding out that they are going to be fathers. It is compiled, according to a story in the Christian Science Monitor, from real home videos found online.

    The story says that it isn't just me who feels this way about advertising - that "the ad's 'real' factor reflects a greater shift in the advertising industry, as research finds that Generation X, Millennials, and Generation Z all place a high value on authenticity in marketing." (Being an aging Baby Boomer, I'm happy to be in their company.)

    And so, since Sunday happens to be Fathers Day - and because I remember how excited I was when I found out Mrs. Content Guy was pregnant - I thought I'd share the commercial with you here.

    It is an Eye-Opening approach to marketing that ought to be adopted by more businesses - it is about creating connections rather than making sales, about establishing relevance rather than selling, selling, selling. It is, I think, terrific work ... and continues the pattern of Dove's broader work, which focuses on real strength and real beauty, not some artificial and ultimately unobtainable version of these attributes that is so often peddled by marketers.

    Enjoy.

    KC's View:

    Published on: June 19, 2015

    Fast Company reports that the advent of commercial delivery of products via unmanned drone aircraft could come sooner than many people expected.

    According to the story representatives of both Amazon and the Federal Aviation Administration (FAA) testified before the US House of Representatives’ Oversight and Government Reform Committee this week "on the feasibility of using drones for commercial purposes - and it turns out Amazon could be making drone deliveries within the year. Not only that, but the e-commerce company wants to deliver products within 30 minutes using the small, unmanned aircraft.

    "Michael Whitaker, the FAA’s deputy administrator, said the agency expects to formalize regulations for commercial drones within 12 months. This is a huge change; commercial drone regulations for purposes such as delivery and filming major sports events were not expected until 2016 or 2017 at the earliest."

    However, there remains at least one major issue to be resolved: will the use of drones for commercial deliveries be regulated at the local or federal level; Amazon is lobbying heavily for the latter, believing that state or local authorities would be "more vulnerable to demands by local citizens."
    KC's View:
    It is amazing how fast this story has evolved ... it seems almost like yesterday that Jeff Bezos was introducing the notion of drone deliveries to an incredulous American TV audience on "60 Minutes," and we've moved with extraordinary speed from there to the FAA saying "no way" to the FAA saying "probably no way" to the FAA saying "no way anytime soon" to the FAA saying, "Look, up in the sky..."

    Will there be problems once this all kicks into gear? Sure. Will there be backlash? Almost certainly.

    But the thing to really pay attention to here is Amazon's goal of making deliveries in 30 minutes. Which seems right now like something that we probably don't need, until the first time it happens, and we begin to wonder how we ever lived without it.

    Published on: June 19, 2015

    It is just about a year since the Market Basket kerfuffle created so much controversy in New England ... and so, it seems like the perfect time for a trailer for the documentary about the subject be made available online.

    Directed by Jay Childs, “Food Fight, Inside the Battle for Market Basket,” describes itself as "the story of the battle to save Market Basket, and about the power of ordinary, passionate people to rewrite corporate history." The battle came down to two cousins with different visions and financial strategies for the company, and how the debate largely was framed as being Main Street vs. Wall Street; the movie seems to accept this portrayal as fact (it actually may be a little more complicated than that).

    The movie apparently will debut this fall. Stay tuned.

    KC's View:
    I'm looking forward to seeing this movie, though the trailer does make it seem as if it might as well have been shot in black-and-white for all the motivational complexity it seems to have. But, trailers and trailers and movies are movies, and we'll have to see the whole thing to see how it turns out in the end.

    Published on: June 19, 2015

    The Wall Street Journal reports that when the $10 bill is redesigned by 2020, the visage of Alexander Hamilton - the nation's first secretary of the treasury, in the George Washington administration - will be replaced by a noteworthy American woman.

    However, the name of the woman has not been revealed - because the US Department of the Treasury has not yet decided who it will be.

    Treasury Secretary Jacob Lew, who will make the decision, has asked for citizen input; among the early frontrunners are people like Eleanor Roosevelt, abolitionist Harriet Tubman, civil-rights icon Rosa Parks and suffragist Elizabeth Cady Stanton. Lew has said that he wants a woman seen as a ":champion for inclusive democracy."

    The Wall Street Journal writes that Lew is Lew is "looking at options to include Mr. Hamilton either on the redesigned $10 note or on a different bill, so it doesn’t appear that he’ll disappear entirely."

    And, as is usual now when currency gets upgraded and/or redesigned every decade or so, the new bill will have security enhancements making it more difficult to counterfeit, and also will have features making it easier for the visually impaired to handle.
    KC's View:
    I might've gotten rid of Andrew Jackson instead of Alexander Hamilton, but what do I know?

    I think this is a fine idea. Hell, who among us would be against champions of inclusive democracy?

    Published on: June 19, 2015

    The Grocery Manufacturers Association (GMA) said yesterday that "the enormous costs, complexities and challenges for food manufacturers to comply with Vermont’s food labeling mandate show the critical need for Congress to pass federal legislation setting a uniform national food labeling standard."

    GMA said that while it is challenging the Vermont mandate in court, the July 2016 implementation date means that manufacturers have to begin planning for label changes in the event the court challenge fails.

    These suppliers "are finding even more costs and challenges from the law, GMA said in a letter to Vermont Governor Peter Shumlin ... In its letter, GMA said that the costs to change labels and supply chain systems will be so great that these costs could exceed revenue to food manufacturers from the sale of products in the state."
    KC's View:
    Of course, one of the ways manufacturers could deal with the whole issue of Vermont being an outlier would be to simply label all their products, even if the law does not require it. Y'know, in the interest of transparency and all that.

    One of the interesting things about the GMA press release is that it highlights "a clause in the law that holds food manufacturers liable for fines of $1,000 a day if a mislabeled product is found on Vermont shelves, even if the manufacturer was not responsible for it being in the store." GMA CEWO Pamela Bailey says that "with national food supply chains, even with the best of intentions, excellent supply chain logistics and herculean efforts, 5 percent to 10 percent of products might be mislabeled in stores at any given time."

    I'm totally sympathetic to the idea that if a manufacturer is not responsible for selling an unlabeled product to a Vermont retailer, it should not be held responsible. You can put my name on that petition right now.

    But...I'm totally fascinated by the idea that GMA concedes that as much as 10 percent of the product in a retail store might be mislabeled, apparently because retailers apparently are stocking these items through unconventional means. Which matches up with what I've been told by a number of retailers about being able to compile a comprehensive and 100 percent accurate list of vendors - they can't do it.

    In 2015, with so many concerns about the food supply, it strikes me that there are way too many wild cards.

    Published on: June 19, 2015

    The Associated Press reports that spice manufacturer McCormick & Co. is being sued by a smaller rival that accuses it of reducing the amount of pepper in its tins by 25 percent without informing consumers of the change.

    According to the story, "In its lawsuit, Watkins claims McCormick has violated federal and state laws regarding deceptive trade practices and has misled consumers and food retailers ... As the dominant pepper player, McCormick essentially has set a standard for packaging in the market, prompting competing brands to use similarly sized tins, Watkins argues."

    McCormick, on the other hand, says that it "reduced the net weight of its black pepper and has been forthright about the changes," and that it "followed industry standard procedures and were transparent about this change, clearly updating the net weight on packaging, issuing a UPC code change and notifying retailers well in advance. It is typical for packaging size and UPC code changes to take time in store to transition."
    KC's View:
    It sounds like while McCormick did everything it was legally required to do, there may have been some gaps in the whole consumer transparency piece. I have no idea if the lawsuit has any legal merit, but it has been pretty well documented that one of the ways that many manufacturers keep package prices the same is by reducing the amount of product in the package.

    It may be legal. But it may not be the kind of publicity that McCormick wants to get. And I wonder if McCormick would suggest that it has been as transparent as possible, as opposed to as transparent as legally required.

    Published on: June 19, 2015

    The Los Angeles Times has a good piece about a California Labor Commissioner ruling concluding that Uber drivers are employees of the company and not independent contractors - which means that they are entitled to be reimbursed for tolls and mileage expenses.

    The ruling establishes as a guiding premise that Uber would not exist without these drivers, which makes them employees.

    The Times writes that the decision "could disrupt the Silicon Valley start-ups that have redefined the relationship between companies and workers. The case could spawn other legal challenges from workers and regulations from cities and states ... If the case winds up before the California Supreme Court, it could lead to a broader, precedent-setting ruling."

    Indeed, earlier this year a federal court "gave the go-ahead to a class-action lawsuit in federal court in San Francisco involving drivers who argue that they are employees entitled to benefits such as unemployment insurance, workers' compensation and healthcare."
    KC's View:
    I'm no lawyer, so it hard for me to even understand this ruling ... in some ways, it strikes me that Uber drivers are the essence of independent contractors, but I'm obviously missing something.

    I did think that this email from an MNB reader who actually is a lawyer to be interesting:

    The California Labor Commissioner's recent ruling that Uber drivers should be classified as employees was of interest as that is the issue I thought about when first reading of Amazon's idea to farm out package delivery to individuals.  Uber has a better argument that the Uber drivers have control over all aspects of their work.  Uber has no direct obligation to get a passenger from point A to point B,   However, Amazon has am obligation to deliver their packages.  Amazon also faces the same insurance questions - if a person is delivering packages for Amazon their "pleasure/commuting" auto insurance won't cover them.  They would need a business use rider and that is not cheap.

    Interesting perspective.

    I have to wonder if this will slow down Uber's hoped-for growth ... I know it is trying to launch a delivery business, but hasn't been as successful as hoped. This won't help.

    Published on: June 19, 2015

    • The Wall Street Journal reports that Walmart is putting a renewed focus on store greeters: "The renewed focus on 'door presence' is part of Wal-Mart’s efforts to improve the profitability of its U.S. operations by making the stores friendlier, keeping them well stocked, and reducing theft."

    According to the story, "Three years ago, the retailing giant moved its 'greeters' away from entrances in many stores so they could do double duty directing shoppers to open registers or tidying shelves." Now, it is putting them back, testing the concept "in around 300 of its 4,500 or so U.S. stores. It also has added 'asset protection customer specialists' to some door areas - employees tasked with the dual job of saying welcome with a smile and deterring shoplifters by checking receipts before some shoppers leave and giving a preliminary scan of merchandise being returned."
    KC's View:
    I've always thought that the elimination of the greeters was a signal of Walmart not understanding some of its differential advantages, and making moves designed to make it more efficient but not necessarily more effective. People joked about greeters, but they reflected essential Walmart values ... and I think that it is a good thing that the company may be rediscovering some of them.

    Published on: June 19, 2015

    Internet Retailer writes that "Marvin Ellison, currently president and CEO-designee of J.C. Penney Co. Inc., spoke frankly about the chain’s direction during a presentation at Piper Jaffray’s Annual Consumer Conference in New York yesterday. He said leveraging the locations of its more than 1,000 stores and those stores’ inventory into e-commerce transactions is a strategic initiative the department store has in progress.  

    "The chain is already testing fulfilling web orders from stores, with a full rollout planned for 2016. It is also testing a buy online, pick up in store the same day program. A chain-wide rollout is planned for next year."

    Ellison also said that J.C. Penney will “'assort our online business in a way that we’re going to bring in new customers,' as opposed to treating it as an extension of what’s available in store, just with more sizes and colors." And, he said that "J.C. Penney also is laying the groundwork to do more targeted, personalized marketing with consumers."
    KC's View:

    Published on: June 19, 2015

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

    • Kroger said yesterday that its Q1 revenue was up 0.3 percent to $33.1 billion, with profit up to $619 million from $501 million during the same period a year ago. Same-store sales for the period were up 5.7 percent.


    • The Associated Press reports that McDonald's "is slimming down: For the first time in more than 40 years, and perhaps ever, McDonald's says its number of restaurants in the U.S. is shrinking.

    "McDonald's plans to close more restaurants in the U.S. than it opens this year, according to the world's biggest hamburger chain ... the closings are part of a strategic review intended to set the stage for the future growth."

    When they're doing that strategic review, they ought to consider putting actual food on the menu. IMHO...


    • In the UK, City AM reports that Google "could soon be partnering with private equity fund Permira to make a joint bid for Tesco’s customer data business. The two firms are in talks to make a bid for Tesco’s data wing, Dunnhumby, which gathers and analyses data from about 1billion shoppers across the world."
    KC's View:

    Published on: June 19, 2015

    • Wegmans has named two new vice presidents, as Anne Meath has become the vice president of organizational development, while Kathleen Fitzgerald has been named vice president of human resources for the company's corporate, distribution and manufacturing division.
    KC's View:

    Published on: June 19, 2015

    An email about an ongoing topic of conversation from an MNB reader:

    I have been thinking about the new 365 by Whole Foods Market since it was first announced, and with 25+ years of being a vendor to Whole Foods I am wondering what their strategy is going to be and where they are going to get the buying staff that has a different mentality...definitely not within WFM.

    As a manufacturer who has built several brands thanks to Whole Foods I always put in a 40% margin for them when figuring my retail price. The day I go into a WFM buying meeting with less than a 40% margin and have it accepted will be truly monumental. I only see three scenarios for 365 by WFM stores; one, they take lower margins on current items (which will bastardize the WFM brand…bad); two, they become an EDLP (Everyday Low Price) store with less fluff and square footage, take less margin and no promos, plus with this scenario the manufacturer can drop their price because it isn’t having to build in monies for free fills, shelf promos four times annually, marketing dollars (distributor shows and ads) and chargebacks from the distributors for items “promoted" to the stores (and at the distributors price to the store, not the manufacturers price to the distributor) [Note: people forget the money has to come from somewhere to pay for these things and rarely is it the retailer]; three, they become a private label company like Trader Joe’s and do all the above.

    Trader Joe’s negotiates quality and packaging size/type directly with manufacturers, pays quickly (I’ve had it take over 90 days to get my money for product sold to WFM, though it was the distributor not paying for “lack of movement from the warehouse,” which the distributor did not help facilitate...we had to personally go see it to the shelf which cost us enormously), has unique sizes (meant for one or two people…millennials???), is self-distributed (which saves anywhere from 7-30% margin), and takes a much lower margin than WFM average of 35.7% (as noted in their press release of May 6, 2015).

    None of this is rocket-science and with their war chest they have the ability to roll enough of these out in one region/city-at-a-time to make it work. I wish them luck and hope they do follow the TJ method, because as a manufacturer I’d love to see a simpler relationship, lower prices on the shelf and a slew more stores. Bring it on!




    Reacting to my coverage of criticism that Walmart may have used its charitable foundation to grease the wheels of business growth, MNB user Rich Goldschmidt wrote:

    I am a long time reader and generally disagree with your assessment. Charitable donations and feeding the hungry are excellent endeavors. There are no questions about that.
     
    I have personally witnessed Walmart donating over $25,000 to a Catholic sponsored food bank in NWA. There was no political gain. It was feeding the hungry, the unemployed, and the people down on their luck. Witnessing people, line up in their cars on a weekly basis, to obtain food for their families is … gut-wrenching.
     
    The real issue is the economy. Perhaps Walmart, and thousands of volunteers across America, are only putting a band-aid on this economic heart-wound. However, they are doing something constructive. As such, your skepticism is myopic. You have missed the under-pinning of the story.
     
    You would benefit your readers, if you would connect the dots about what is really happening in America. You can wonder about an IRS probe, or true intentions about feeding inner city people. However, your journalistic speculation doesn’t solve the problem.
     
    If you want to matter and raise awareness … educate your readers to the truth. You have a voice in the CPG community. With that voice comes social responsibility.

     
    Gee, I didn't think I was that critical. I think my main points were a) that it seems entirely reasonable that a company would find out where to direct charitable efforts by where the business grows, and b) that a good indicator of when the line if crossed comes not when the spigot is turned on, but when it is turned off.

    That doesn't sound so mean-spirited to me.

    Another MNB user wrote:

    Look no further than the SEIU Union and their henchmen to who is behind yet another attack on Walmart. Why not add every major retail chain that has a foundation-charitable arm to this witch hunt?

    Indeed. Why not?



    On another subject, from another reader:

    I keep wondering why you seem to like Uber disrupting transportation with independent drivers – but don’t like Instacart disrupting the Peapods of the world – or something like Uber disrupting Amazon’s FedEx model?

    You misunderstand. I'm totally fine with Instacart being a disruptive influence, and I think it is the kind of thing that folks have to be cognizant of ... but I still don;t think it has a sustainable business model. I don't think there's a conflict there.




    Got a lot of reaction to yesterday's FaceTime video commentary about Henny Penny and its willingness to treat its employees like assets and investments, not liabilities and costs ... a philosophy that resulted in an ESOP there:

    One MNB user wrote:

    Totally agree! When corporate greed gets in the way of sound, long term business decisions the downward spiral begins.

    And another:

    You absolutely have this right. Any investment with your "owners" comes back two or three fold. There's no greater sense of accomplishment than seeing one of our front line owners being able to advance in the company.

    And still another:

    Completely agree with your take on how companies treat their employees. When treated as liabilities employees will save their loyalty, energy and ideas for outside interests and future employers. They will be there to get the paycheck until they find a place where they are treated as an asset instead.

    One of my mentors over the last 34 years taught me this: people live up to your expectations and down to your suspicions. While I don’t think poor regard for the value of employees can alter their essential character, I think it drives the good ones out and the lousy ones will stay on for the paycheck and share their attitude until it permeates the culture and facilitates that wobble into mediocrity you so well describe.


    And another:

    Count me in as one that agrees with you 100% on this one!  

    My experience over time as been that when the financial people start looking for money enhancement to the bottom line the first opportunity they zero in on is store expense because it is usually the largest expense item on the ledger so it "sticks out" big as a place to find money.

    This is when the store operators, starting with the COO, need to step up and say we cannot cut store expense, if they legitimately cannot cut the store expense without risking the lowering of store standards or worse, store moral because people want to do a good job, but they are unable to because they do not have enough help in their department. The operators know what it takes to run a store up to the established standards, not the accountants. Even store operators have been known to reduce the help required in the service departments where employees service customers face to face. Makes no sense.


    MNB reader John Lloyd wrote:

    Great face time commentary!

    I kind of see this issue in the same light as language. Some folks think there are “bad” words and “good” words. It’s my opinion that words are words, and concern should be for inappropriate usage. If I’m angry with someone and tell them to “F OFF” that would not only be correct but appropriate use of the English language.


    MNB reader Bryan Silbermann wrote:

    Thanks for sticking to your guns by continuing to focus on the criticality of employer-employee relationships.  Passionate – absolutely.  Misguided – not at all.

    We have always believed at PMA, just as Rob Connelly seems to do at Henny Penny, in treating one’s staff team as equal members of a living, breathing organism which thrives on shared commitment, investment in continuous learning, and constant innovation.  Those build strong culture, strong culture builds exceptional service, exceptional service builds powerful relationships with customers (members), and so goes the virtuous cycle. 

    So beat the drum my friend: you have others who believe as you do that people want to belong to organizations that value them for who they are and what they can become -- even more than just what they are.

    KC's View:

    Published on: June 19, 2015

    "OffBeat" will be a short one this week, as I continue my trek cross-country, on my way to Oregon where I will take up my summer adjunctivity at Portland State University's Center for Retail Leadership.

    I've been traveling since Monday and only have gotten as far as Chicago ... in part because there have been some lovely detours. On Tuesday, I went to Cleveland, where I had the opportunity to see only my second NBA game - the sixth and, as it ended up, final game of the playoffs. Terrific city, electric atmosphere ... and I had a chance to see both LeBron James and Stephen Curry in action. (The only other time I've been to an NBA game, it was to see Michael Jordan play in Chicago. I'm spoiled.)

    And then, on Wednesday, I drove to Chicago so I could catch a flight to Boston, where I had a speaking engagement yesterday. I flew back yesterday, had dinner with my son (who lives here) last night, and headed west in just a bit.

    I'm looking forward to it. The first driving segments have been somewhat problematic - lots of rain that made it hard to see and certainly prevented me from putting the top down, and isolated pockets of traffic that slowed me down. (The worst two hours were the first two hours - getting into New Jersey normally would take me 45 minutes from home, and it took me well over two hours just to cross the George Washington Bridge.)

    But I'd be a fool to complain. The chance to hit the open road and see the country is a privilege and an opportunity. Life is filled with possibility.

    I do have a question, though.

    I expect to spend the next two evenings in Grand Island, Nebraska, and then in Rock Springs, Wyoming. Anyone have a good restaurant/brewpub recommendation?



    One other thing. I was gratified how many people got my Martin Milner reference last week ... and even how many referenced both George Maharis and Glenn Corbett.

    Apparently, we're all in this aging thing together.




    That's it for this week. Have a great weekend, and I'll see you Monday ... where, hopefully, I'll writing from Boise and getting ready for the last leg of my trip to Portland.

    Slàinte!
    KC's View: