business news in context, analysis with attitude

Published on: July 15, 2015

A guest column by Chelsea Ware

Content Guy's Note: You may remember that I met Chelsea Ware at Portland State University's Center for Retail Leadership's annual executive conference. She's a student in the program, and when I found out she also was a blogger, I invited her to write a piece for MNB ... and when she did, we got a terrific reaction to her insights into how her generation thinks and acts ... So I asked her to write another one.

Enjoy.

A recent cleaning session revealed five different loyalty cards in my wallet and six more scattered in the various nooks and crannies of my studio apartment; and I doubt I am alone. According to Time Magazine, Americans had a collective total of 2.65 billion loyalty program memberships in the year of 2012. But when you think about it, does having a loyalty card really increase the frequency of shopping with a particular retailer? For me, I would have to say no - based on the fact that I probably use three of my loyalty cards on a regular basis while the rest sit and collect dust.

So where are the majority of retailers going wrong?

To begin with, when targeting millennials with loyalty programs, many retailers don’t understand what makes us loyal or what we view as a reward. At most grocery stores, the most common rewards are gas points and moderate price discounts. However, due to economic and cultural shifts this loyalty program model could soon become obsolete.

For older generations, the automobile was the ultimate symbol of independence and freedom; it was a rite of passage that enabled people to have more experiences. However, due to the astronomical amount of student debt that millennials hold, many people my age see owning a car and its associated monthly payments as an expensive ball and chain. Compared to previous generations, millennials drive less and walk, bike and take public transit more. If we do drive, we often use car sharing programs like Zipcar and Car2Go and don’t visit the pump too often. In an age where most of millennials' income goes to Nelnet Student Loan Provider and rent, we have had to find other ways to express our independence and freedom.

However, this cultural shift has opened up a great opportunity for retailers to better enhance their loyalty programs. Millennials are getting married and having children later, which means that we aren’t as family oriented in our twenties and thirties. We have time to cultivate our personal interests and we take pride in doing so. We partake in things such as cooking classes, attending art exhibits, and religiously following music shows. Although we may not own cars, our vast knowledge of technology and social media in conjunction with our passion to nurture our personal hobbies has allowed us to virally express our individuality and independence.

As a result, retailers should structure loyalty programs around bringing these sorts of experiences to us. Although occasional moderate price discounts are nice, many twenty somethings are eagerly waiting for the day when our purchases will amount to free or reduced price concert tickets that we can photographically flaunt to our followers on Instagram or give us exclusive access to a hot new product that we can show off on Facebook. We may not have cars, but we do have a strong desire to brag to our friends on social media, so please give us something to brag about!

Chelsea Ware is a senior at Portland State University who is pursuing a bachelor's degree in business marketing in addition to a food industry leadership certificate. When not researching food industry trends, you can find her at Whole Foods in search of ingredients for the perfect pasta recipe.

Published on: July 15, 2015

by Kevin Coupe

This has nothing to do with business. But I just think it is incredibly cool, and it appeals to my inner geek.

Yesterday, the New Horizons space probe that was launched by NASA in January 2006, flying at 31,00 miles an hour, came with 7,800 miles of Pluto - a planet that is three billions miles from earth and that takes more than 247 years to make a single orbit around the sun - and sent back a picture (above).

The scientist Neil deGrasse Tyson said that getting such a small probe (about the size of a grand piano) to precisely the right place in the solar system at the right time was like hitting "a hole-in-one on a two-mile golf shot."

Much more is expected, and it apparently will take as long as 16 months for all the pictures and data to be sent back to Earth.

Mow, New Horizons continues its journey, into the outer solar system, where icy planets and dwarf planets may await it, and then into interstellar space.

And I just think this is not just Eye-Opening (and potentially enormously so depending on what New Horizons finds out there - I'm hoping for Vulcans), but awesome in its implications about our capabilities, and our potential.

We all ought to feel not just good about, but great about the fact that we can do it.

I hope that NASA is giving New Horizons just one command:

Second star to the right. And straight on 'til morning.

Published on: July 15, 2015

The Associated Press reports that a new survey done by a group called the Small Business Majority concluded that "companies shouldn't be allowed to withhold goods or services from lesbian, gay, bisexual or transgender people based on an owner's religious beliefs."

According to the story, "Two-thirds of the owners questioned ... said businesses shouldn't be able to refuse to provide goods or services to LGBT customers. Fifty-five percent said businesses shouldn't be allowed to deny wedding-related services to same-sex couples because of an owner's beliefs."

In addition: "A majority of the survey participants said they support laws that give additional protection for LGBT people; 80 percent support a federal law to prohibit discrimination against LGBT individuals in restaurants, hotels and other businesses that are open to the public. Eighty-one percent said they're in favor of a federal law that prohibits employment discrimination that's based on the sexual orientation or gender identity of a worker or job applicant."

However, two-thirds of the companies questioned said they had no policies protecting LGBT employees from discrimination, though "sixty percent said creating such a policy is the right thing to do, and about 40 percent said having a policy makes it easier to attract and retain good workers and draw more customers."

The AP story notes that "nearly half, or 47 percent of the survey participants identified themselves as Republican, 33 percent said they were Democrats and 19 percent said they were independent." The survey was actually conducted two months before the US Supreme Court ruled that same-sex marriage is legal and constitutional in all 50 states.

Published on: July 15, 2015

Fascinating column in the New York Times that compares the GMO industry to the nation's financial system, arguing that just as the financial system was deemed too big to fail and yet brought us dangerously close to the precipice of a new depression, the pro-GMO movement may be doing precisely the same thing.

"The G.M.O. experiment, carried out in real time and with our entire food and ecological system as its laboratory, is perhaps the greatest case of human hubris ever," the writers says. "It creates yet another systemic, 'too big too fail' enterprise — but one for which no bailouts will be possible when it fails."

The most compelling argument: that, in the headlong rush to embrace technology, we do not mistake "the absence of evidence for evidence of absence."

Thoughtfully written and worth reading ... and you can do so here.

Published on: July 15, 2015

Marketing Daily reports that "Amazon remains the best perceived brand for the first half of 2015, according to YouGov BrandIndex’s mid-year rankings of the 10 best perceived brands of the first half of 2015, along with the 10 brands with the biggest perception gains. The brand was also the highest ranked brand overall for 2014."

Netflix is second ranked, followed by YouTube, Cancer Treatment Centers of America, Subway, Apple, Samsung, Google, Ford, and Lowe's.

YouGov BrandIndex CEO Ted Marzilli tells Marketing Daily that "most of the brands at the top of the list invest heavily in advertising and marketing ... Show this list to your CFO.”

Published on: July 15, 2015

USA Today reports that Texas billionaire and philanthropist Sid Bass has become an investor and partner in Blue Bell Creameries, which had to shut down its factories and recall all of its products after listeria contamination of its ice cream was linked to 10 illnesses.

"We are pleased Sid Bass has made a significant investment with our company," said Paul Kruse, Blue Bell CEO and president, in a prepared statement. "The additional capital will ensure the successful return of our ice cream to the market and our loyal customers."

No details about the size of the investment were disclosed, but the story notes that "Blue Bell is extremely popular in its home state, and Bass and his family have deep ties to Fort Worth."

Published on: July 15, 2015

• Add Best Buy to the list of retailers looking to compete with Amazon's Prime Day promotions today, as the Oregonian reports that it will hold a Black Friday-like sale on July 24-25.

Amazon is offering a series of steep price cuts as often as every 10 minutes only to Prime members today as a way of celebrating its 20th birthday; Walmart is countering with a similar sale on its website and the Sam's Club site, but emphasizing that a membership fee is not required.


• "U.S. online grocery shoppers are upping the amount of grocery shopping they complete online," according to a new survey by Door to Door Organics, a natural and organic online grocer. "Of those surveyed, more than half (54%) said in the past year they had increased the amount of grocery shopping they do online by an average of 29%. Less than 4% said that in the last year they had decreased their online grocery shopping and 42% stated that the amount of grocery shopping they do online had stayed the same. Overall, shoppers indicated that an average of 19% of their weekly grocery shopping is currently done online."

Published on: July 15, 2015

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

• The International Council of Shopping Centers has released its annual back-to-school survey, concluding that more than one-third (34%) of households have already begun shopping, that "67% of BTS shoppers plan to spend more than last year," and that "consumers still prefer physical stores for BTS shopping, with 83% of their purchases involving a store, including 7% of purchases that will be made online and picked up in-store."

The survey also says that "BTS shoppers are still very price and deal driven. They expect to get the best deals in August, which could be one of the reasons that they plan to do the majority of their BTS in August. Consumers are also influenced by marketing and three-quarters (74%) of households report that they will likely start BTS purchasing when advertisements from major retailers begin to appear."

Not to be cynical, but I would've been surprised if the International Council of Shopping Centers had come out with a survey saying that more people prefer online back-to-school shopping. All I know is that when it comes to making a choice between the crush at Staples or the relative ease of online shopping, I much prefer the online experience.

Published on: July 15, 2015

• Sears Holdings Corp. announced that it has a new president - Joelle Maher, most recently the COO at Gymboree Corp., and a former executive at Levi Strauss & Co, Lucky jeans, Old Navy and Lord & Taylor.

Published on: July 15, 2015

The other day, MNB took note of a Wall Street Journal story about how the US Food and Drug Administration (FDA) has decided to give "restaurants and other food purveyors an additional year to comply with new rules that require calorie counts on menus, a response to concerns by some food establishments that the requirements are confusing and broad." The new deadline is now December 2016, and FDA said it "would post a draft guidance document in August to answer some of the frequently asked questions from the industry."

I noted in my commentary that the supermarket industry was cautiously happy about the delay, and voiced a certain skepticism about the industry's willingness to accept the same labeling rules as the restaurant industry, despite the fact that it competes with that industry and even would like to supplant it in many cases.

In response to these comments, I got the following email from MNB reader Leslie Sarasin, who is the president/CEO of the Food Marketing Institute (FMI):

In yesterday's Morning News Beat, you commented on FDA’s decision to provide a one-year delay to the compliance date for restaurants and “similar retail food establishments” for the new final chain-restaurant-menu-labeling rule.

As you know, the vast majority of products sold by supermarkets are prominently marked with nutrition information and have been since the early 1990's upon implementation of the Nutrition Labeling and Education Act, a law which was supported by the grocery industry but from which the restaurant industry spent tremendous resources to gain an exemption.  The restaurant industry continued to expend its political capital to exempt itself from nutrition labeling for many years thereafter; in fact, it was only after that industry segment was unsuccessful in holding off myriad inconsistent local menu labeling ordinances that its national organization determined it would seek a federal menu labeling law.  Against this backdrop, suggestions that the restaurant industry sought this federal regulation in order to be more transparent with its customers would seem disingenuous at best.

To be clear, FMI does not oppose its members' sharing nutrition information with their customers, including in restaurant-like settings.  In fact, many FMI member companies voluntarily provide such information already and others are in the process of doing so.  FMI's concern with the new FDA regulations is that they were designed for a chain restaurant environment in which there is a menu or menu board that generally contains limited items and little or no variation among restaurants in the chain -- same menu, same ingredients, same nutrition information, same labeling requirements among all stores in the chain.  This, of course, does not hold true for grocery stores.

To the contrary, grocers have been challenged with the business implications of applying a rule designed for chain restaurants in their stores. Among the things that make this regulation so onerous for FMI members is the sheer number of items that would have to be labeled (vis a vis QSR, casual dining and related chain restaurants).  In an extensive FMI audit among food retail companies regarding menu labeling compliance challenges, we found that on average supermarkets sell at least 200 unique items that would be covered under the law.  When adding up all the meal occasion opportunities in a supermarket environment, that 200-item count becomes a combo that simply wouldn't be scalable for even the most nimble chain restaurant, much less a supermarket.  Grocery stores generally do not have comprehensive menu boards at a location to display the information and many of the items covered are sourced from products within the store, which is an important way for our members to avoid unnecessary food waste.  And most unfortunate of all, based on the way the FDA regulation is written, we are concerned stores will have to move toward more standardization of product selection, which would seem contrary to the law's intent as well as to consumer interests.

The reference "that supermarkets want to be seen as competitive with and comparable to restaurants, except when it comes to following the same menu rules, in which case they want to be seen as a different class of trade" struck me as particularly interesting.  In my nearly 30 years of food industry public policy experience in Washington, D.C., this menu labeling requirement marks the first occasion I recall of the restaurant industry's suggesting  that restaurants should be treated like "other similar establishments."  This certainly was not that segment's perspective when considering such regulations as those associated with the Food Safety Modernization Act, allergen labeling, country of origin labeling, GMO content labeling, bioterrorism recordkeeping, inclusion of date codes on products, and revisions to the Nutrition Facts Panel, all of which apply to the grocery segment but from which the restaurant industry has sought and achieved exemption.  So, on this occasion I must respectfully disagree with your analysis of supermarkets' role in the regulatory environment's impact on customer transparency vis a vis that of restaurants'.

In the interest of full disclosure, here’s a link to all the outstanding questions (https://www.fmi.org/docs/default-source/communications-uploads/concerns-and-questions-for-fda.pdf?sfvrsn=2) we have shared with FDA and that we look forward to clarifying through the guidance development process that FDA's  Mike Taylor referred to in his statement (http://www.fda.gov/Food/NewsEvents/ConstituentUpdates/ucm453529.htm) when saying that FDA would be considering comments to draft guidance in August.  So, indeed I am encouraged that FDA’s commitment will give the grocery segment more time to garner at least some additional clarity and the answers needed to avoid having to make significantly impactful business decisions based on a law that wasn't designed for the grocery environment, doesn't address relevant issues for the grocery environment and remains unclear in its applicability to the grocery environment.

I would like to clear up one issue about which I may have been less than articulate. I in no way would argue that the restaurant industry has been more accepting, embracing, or progressive about food labeling or any law or laws that would mandate it. Far from it. If I left that impression, it was my mistake.




I was interested yesterday that I got a bunch of emails making precisely the same point about Walmart's decision to fight back against Amazon's Prime Day promotion by saying that it does not believe in having to pay a membership fee to get discounts.

MNB reader Linda White wrote:

Isn’t Walmart’s response a little like the pot calling the kettle black.  Hello!  Sam’s Club charges people money to save money!!!!!

MNB reader Jeff Heddinger wrote:

Sam's Club has a membership fee.  Their customers pay to save and they are a division of Wal Mart.

And from another reader:

Walmart Inc. does charge (more than $100 in some cases for extra savings) for access to lower prices, just not at Walmart, it’s at Sam’s Club…but it’s the same premise, just bigger boxes.

There were at least a couple of dozen emails making this point ... which I was glad of, though I wish I'd thought to make it myself. Thank goodness for smart readers...




And finally, on a sobering note, I got the following email from a reader who self-identified as a Haggen vendor:

Sales are nowhere near what they were projected to be when (Haggen) contacted us at the very beginning of the transition. As someone very famous has said about other stores in trouble: ”dead chain walking”.

It is a shame because at one time they were among the best of the best.

I am hearing this from a number of sources. It does not look good.

Published on: July 15, 2015

In the annual Major League Baseball All-Star Game, the American League defeated the National league 6-3, a win that will give whatever American League team gets into the World Series a home field advantage.