business news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: July 17, 2015

    by Kevin Coupe

    The Associated Press reports that scientists at Oregon State University have developed a new strain of seaweed that they say will have twice the nutritional value of kale - and will taste like bacon.

    It is described as a new variety of "dulse," which grows "wild along the Pacific and Atlantic coastlines" and is "harvested and commonly used by people in dried form as a cooking ingredient or nutritional supplement." But scientists, the story says, "have been trying to develop a new strain of the seaweed for more than 15 years ... Among the most promising foods created were a dulse-based rice cracker and salad dressing. And bacon-tasting strips, which are fried like regular bacon to bring out the flavor."

    My brother and his 14-year-old son (who we have taken to calling "the Content Nephew") are with me for a few days in Portland, so I asked my nephew if he'd eat this ... and he said without hesitation that he would. So that's one.

    I sort of like my seaweed straight, in sushi or with poke ... but I think I'd be willing to try this, too. Especially if it has more nutritional value than kale, which I generally can't stand. (And by the way ... if it takes genetic engineering to make seaweed taste like bacon, that could be the deal-maker for me.)

    So pass me the bacon-flavored dulse. I'm sure it'll be an Eye-Opener.
    KC's View:

    Published on: July 17, 2015

    The Portland Business Journal reports that New Seasons Market, the 15-unit Portland-based specialty and healthy food retailer, will open a store on Mercer Island in the Seattle market in the fall of 2016.

    The story notes that New Seasons will open the store at a former Albertson's location.

    The Seattle Times writes that the "move is the latest in a shake-up of the Seattle area’s grocery store landscape produced by the merger earlier this year of Safeway and Albertsons. The merger led to the closure of several stores, and to Bellingham retailer Haggen’s takeover of to take over 146 Albertsons and Safeway locations all over the West Coast, including 26 in Washington state."
    KC's View:
    When I write in my headline that New Seasons has Starbucks on its mind it is because the company's CEO, Wendy Collie, is a former senior executive at the coffee behemoth, and there is a general consensus - both inside and outside the company, based on a lot of conversations that I've had - that her goal is to launch New Seasons into the kind of growth curve that Starbucks had. That's not just her personal goal - New Seasons is part of Endeavor Capital's portfolio of companies, and New Seasons is seen as having a lot more value as a much bigger company.

    The interesting thing about this is that as I've spent time in Portland this summer, I've begun to pick up whispers of discontent with New Seasons ... more than a few people have suggested to me that from their personal experience, the retailer has lost a little off its fastball ... and they wonder if the company is so focused on growth that it is not taking care of business at home.

    To be clear, there's nothing wrong with growth, and there's nothing wrong with thinking big. But if the foundation begins to show a little weakness, it creates questions about whether the business model is both sustainable and expandable. And I'm hearing those kinds of questions.

    One other thing. It is interesting to me that Endeavor also has another Seattle food retailer in its portfolio - Metropolitan Market, which has six stores in the area. Metropolitan Market won't be competing directly with New Seasons anytime in the near future ... but if New Seasons does indeed plan to expand quickly, one has to wonder if they will go up against each other eventually.

    By the way, if New Seasons does want to grow quickly ... the folks there may want to consider the lesson of Haggen, which more and more looks like a disaster in the making.

    Published on: July 17, 2015

    There were a range of differing reactions to Amazon's Prime Day on Wednesday - designed to offer rolling promotions of limited assortment merchandise (about 2,000 SKUs in total) throughout the day, available only to its prime members as a way of celebrating the company's 20th birthday - but one thing was for sure: Amazon said it was so successful that it is going to celebrate Prime Day every year.

    Amazon said that it "sold more units on Prime Day than the biggest Black Friday ever and had more new members try Prime worldwide than any single day in Amazon history.  Customers ordered 34.4 million items across Prime-eligible countries, breaking all Black Friday records with 398 items ordered per second. Prime Day was also a great savings day – members globally saved millions on deals. Customers ordered hundreds of thousands of Amazon devices – making it the largest device sales day ever worldwide."

    Among the items sold on deal: "tens of thousands of Fire TV Sticks in one hour, making it the fastest-selling deal on an Amazon device ever," 56,000 Lord of the Rings: The Motion Picture Trilogy sets, 47,000 televisions, 51,000 Bose Headphones, and 12,000 Fifty Shades of Grey Unrated Edition on Blu-ray.

    Now Time reports that many shoppers "came away feeling bitter, perhaps even betrayed. Instead of finding amazing prices on items they truly wanted, shoppers bashed Prime Day on social media because Amazon failed to deliver on the hype. If Prime Day wasn’t being described as a “crappy yard sale” overloaded with bizarre, random items, then observers were saying that the majority of the deals were underwhelming in terms of price. Still others complained out of frustration that the deals they actually did want disappeared before they had the chance to buy because quantities were so limited. And even before Prime Day arrived, there were grumbles because the sales were available only for subscribers to Amazon’s $99-per-year Prime service, not all shoppers."

    Walmart, Time writes, which ran an online sale to compete with Amazon, may have come out looking better "because even if its 'Rollback' deals weren’t amazing, at least they didn’t disappear in 10 minutes, or even 24 hours."

    The Washington Post writes that "branding experts say that the steady drumbeat of social media criticism" of Amazon's Prime Day promotion "should not be ignored, since it probably shows that a wide swath of would-be customers didn't have a good experience during Prime Day. Adobe Digital Index, which captured and assessed millions of mentions of the company on social media Wednesday, found that 50 percent of those mentions were related to 'sadness'."
    KC's View:
    One of the things that Amazon is really good at is learning from experience. I have no doubt that a lot of people found the Prime Day experience wanting ... but not nearly as many who found its Fire smart phone to be wanting. Amazon learns from these experiences, and tends to bounce back with better products and services the next time.

    I also think that one of the ways in which Amazon probably had a better day than Walmart is that it added enormous amounts of data to its intelligence about Prime shoppers and what they want, how much they're willing to spend, and how they respond to specific promotions and price points. That's ann invaluable and actionable stuff, and Amazon will figure out how best to act on it.

    I have to admit that except for all the news coverage, I sort of found Prime Day to be a bit of a snooze. There was one item I was sort of interested in, but it was sold out by the time I was ready to move ... and I never thought about ordering anything else all day. In a lot of ways, Prime Day was designed to appeal to the acquisitive ... and I just don't have that gene.

    Published on: July 17, 2015

    The Oregonian reports that Haggen management is confirming what has been widely reported all week (including here on MNB last Monday) - that "just months after it took over dozens of stores in California, Arizona and Nevada as part of an unprecedented expansion, Washington-based grocery chain Haggen is laying off hundreds of employees in those states and reducing many workers from full-time to part-time status."

    The reason is that Haggen - which added 146 stores to its 18-unit fleet when it acquired supermarkets that had to be divested because of the Albertsons acquisition of Safeway - seems unable to get traction in the new markets, at least in part because of what it calls "unprecedented" activity by competitors. Haggen management says it plans to bring back all the employees and their hours once things get back to normal.

    The story says that Haggen doesn't plan any layoffs or reductions in its original Pacific Northwest stores.

    The Orange County Register is reporting that a union that represents Haggen workers is filing a grievance on behalf of the full-time staffers who were reduced to part time because the "arbitrary reduction" violates their contract. And the San Bernardino County Sun reports that a regional union will also be filing grievances in cases where Haggen has allegedly violated its contract with the union.
    KC's View:
    What a mess.

    I hate to say it, but I am extremely dubious that things ever will get back to normal. The competition that has been unprecedented in its actions now can smell blood in the water ... and they're going to keep attacking.

    The lesson here is from Jaws: it strikes me as almost inarguable that Haggen went into this with not nearly a big enough boat. They had lots of stores, sure, but mass is only part of the equation. You have to have the right strategy, tactics, vision, people, technology and ability to implement ... and there doesn't seem to be a lot of evidence that it did.

    Published on: July 17, 2015

    The Associated Press reports that the expense management system provider Certify says that during the second quarter of the year, " Uber accounted for 55 percent of ground transportation receipts compared with taxis at 43 percent."

    Which is almost a complete reversal from the first quarter, when taxis had a 53 percent market share and Uber was at 46 percent.

    Uber, for those who don't know, allows people to use a smartphone app to hail private cars for rides, allowing them to bypass traditional taxi services.

    According to the story, "In a few cities, Uber beat out taxis by a wide margin for business travelers. In its home town of San Francisco, 79 percent of rides expensed through Certify during the second quarter were for Uber. In Dallas, 60 percent were for Uber and 54 percent in Los Angeles. Certify noted that it saw rental car transactions drop at the same time."
    KC's View:
    Sure, Uber's growth has not been without potholes and detours. But what it has shown us is that a disruptive business can always expose flaws in traditional business models ... and that once consumers decide to go down the new road, it may be very hard to get them back on the well-worn but increasingly irrelevant path they used to travel.

    This is a scenario that can happen to every business, and any business. Be very afraid.

    Published on: July 17, 2015

    The Sacramento Bee reports that Raley's, which operates 137 stores in Northern California but pulled out of the Sacramento market more than 20 years ago, is "looking to return to the city core with a new style of store fit for urban dwellers ... the company is exploring several sites downtown for a smaller-format, farmer’s market style store that would appeal to residents who live in a denser and more pedestrian-oriented environment."

    According to the story, "Raley’s spokeswoman Chelsea Minor declined comment on specific sites, but said the company has been monitoring development downtown and feels it is time to jump in."

    The Bee goes on to write that "Raley’s downtown move would mirror several other proposed or current urban-style markets in Sacramento, and follows a national trend toward more city-center markets as more large-city downtowns are repopulated with residents." In Sacramento, that has meant openings by both Safeway and, in the future, the Sacramento Natural Foods Co-op and Whole Foods. "But Raley’s would be the first major grocery chain to come back into the heart of downtown, where city officials say they are pushing for development that will attract thousands of new residents."
    KC's View:
    I totally get this. I'm living in the city right now, and I can't tell you how exciting it is to be able to walk out the door and find almost anything within blocks ... and this is the experience that more and more people want to have.

    Published on: July 17, 2015

    In Minnesota, the Pioneer Press reports that the second-smallest store in Target's entire fleet - at 16,000 square feet - is scheduled to open next week in St. Paul's Highland Park neighborhood.

    According to the story, the store's location will mean that it will have "a focus on wellness and families ... Think water bottles, yoga mats, free weights, child cough syrup, kosher items and an organics section, the first to be rolled out at a TargetExpress."

    The smallest TargetExpress store, is 12,000 square feet and operates in San Francisco. The company has been putting a much greater emphasis on small store development, and "expects to open another five across the country by the end of the year and two more next year as it shifts away from its big-box format and moves toward smaller stores in urban areas."
    KC's View:

    Published on: July 17, 2015

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

    • The Wall Street Journal reports that "Groupon Inc. is acquiring online and mobile food ordering and delivery service OrderUp, enhancing its local food and drink business ... OrderUp operates in areas including Baltimore and Denver, and several cities with large student populations like Bloomington, Ind."

    Terms of the deal were not disclosed.

    • Food Lion announced that it is "giving one customer at every store, every day, the opportunity to win up to $100 in free groceries during the grocer’s 'MVP Free Grocery Giveaway'." The company says that "more than 15,000 winning customers will enjoy immediate savings of up to $100, not to exceed their grocery bill, at checkout, through this 'pay it forward' program."

    I wonder if Food Lion might be better off just paying everybody who shops at its stores $100 in exchange for them signing an "I will never shop at Aldi or Lidl" pledge card...
    KC's View:

    Published on: July 17, 2015

    • Dollar Tree announced that it has named Michael Witynski to be its new COO. Witynski has served as Senior Vice President of Stores since joining Dollar Tree in 2010. Prior to joining the Company, he held executive positions at Shaw’s Supermarkets and Supervalu.
    KC's View:

    Published on: July 17, 2015

    I continue to get email setting me straight about the Blue Bell ice cream obsession that seems to be shared by folks in one part of the country, and that many feel will not subside despite the problems the company has had with listeria in its ice cream.

    MNB reader Mike Julian wrote:

    Kevin, never in my all too many years in the grocery business have I ever seen a Brand have a cult like obsession from such a large and wide spread section of the consuming population as Blue Bell. In the marketing area we call TOLA (TX, OK, AR, & LA) I have no doubt the consumer demand will cause retailers to restock the product as soon as production is available. There are people in my neighborhood in The Woodlands TX with signs in the front yard that say “God Bless Blue Bell."

    And MNB reader Rich Heiland wrote:

    I lived for 11 years in Quechee, VT. Think Ben & Jerry's, particularly the B&J of the old days, and you have Blue Bell mania.

    Okay. If you say so.

    MNB reader Jim Mahern saw an opportunity to pull together comments on three stories - Blue Bell, A&P's continuing troubles, and the "Millennial Mind" essay written the other day by Portland State University student Chelsea Ware:

    Your comments on Blue Bell and Chelsea were thought provoking to an old grocery sales guy like me. I do believe that Blue Bell can survive as a brand with most of their loyal customers. If you remember the Tylenol scare many years ago, a lot of "experts" predicted the brand would not survive. I guess they are allied with those economists who "predicted nine of the last three recessions".

    As for Chelsea, every new generation claims that the older generation does not understand them. I am sure that Chelsea is a smart student based on her writing, but I bet her college education will still take four years just as business takes time, hopefully not too much, before figuring out how to attract new customers ... Certainly all businesses must learn how to deal with "millennials" but also continue dealing with "perennials", those who come back repeatedly because of a company's reputation and customer service.

    As for A&P, my mother shopped there when I was a kid. I called on an A&P buying office as a young Procter & Gamble salesman in the 60's. They always seemed to be somewhat behind the times even then, both in the store and at headquarters. I guess it has finally caught up with them.

    Two quick comments.

    The difference between the Tylenol and Blue Bell situations is that Tylenol's problem was not self-inflicted. To me, that's a deal breaker.

    As for Chelsea's column, you seem to think she was whining about not being understood. That's not at all what she was doing. Rather, she was making an important point - that in addition to catering to perennials, businesses better start figuring out the most effective way to appeal to young people's hearts, minds and wallets.

    One other thing. A reputation is what you got for what you did yesterday. And customer service only matters if it is relevant to today's and tomorrow's customers.

    From another reader, regarding Chelsea's column:

    Chelsea is spot on in her analysis of preferences of millennials…and she didn’t even need to mention the preference for online shopping which goes hand in hand with her comments about the need to have a car.  My son is 28, likes cars but still finds no need to own or lease one.  He lives outside a major city with great public transportation.  He walks everywhere.  He says he has better things to do with his time than sit in hours of traffic commuting and prefers to put that money toward paying off a student loan.

    On the subject of Starbucks opening in low-income, minority neighborhoods, we got a number of emails making the same, legitimate point.

    One MNB user wrote:

    I do applaud Starbuck’s for opening stores in economically challenged neighborhoods. These young men and women could certainly use the jobs. I am wondering who will be the customers? When I am tight on cash, I don’t spend $3 or $4 for a cup of coffee. Just curious to see how this plays out. I do wish them luck, those neighborhoods have had their share of bad luck, now would be nice to see good luck for a change.

    MNB reader Bob Vereen wrote:

    I don’t understand this.   Drinks from Starbucks are expensive.  How can people in low-income areas afford them?  If they open, bet they won’t stay open long, unless it is for PR purposes, not profitability.

    From another reader:

    What's missing from Starbuck's announcement about low-income area stores that will truly serve the community - and I praise that - is what coffee will cost. It would seem that absent some alternative pricing there might be a problem in terms of neighborhood affordability. Can they, and should they, be selling coffee in low-income areas for higher income prices? Some might argue that's not what those folks need to be spending precious dollars on. I can't help but believe Starbuck's has thought of this and I will be interested to see what they do.

    And from another reader:

    Great employment opportunities for young people in the community but will the community be able to afford the price points offered by the coffee giant?

    And another:

    From 1983-1986, I worked in the in-house advertising department for Zayre stores. Remember Zayre? It was the discounter that “owned" the East Coast and one of the reasons that Wal-Mart remained a regional player. It was considered a philanthropic outfit — socially committed in today’s parlance. Store managers had a discretionary budget to be used for community and neighborhood projects, like sponsoring Little League and Pop Warner teams or supporting school endeavors (no soccer teams back then). Now this story may be apocryphal — it happened before I joined the company — but according to office legend, when Miami’s Liberty City erupted in riots in 1981, the only business in the area that wasn’t torched was the Zayre store. Why? Because it was more than a business in the area. It was the business that supported the kids in the neighborhood.

    My guess is that there are several things at play here. One is that Starbucks will have some pricing elasticity that will allow its products to be more affordable. There's also probably a sense that if you improve a neighborhood by being there and offering jobs, the riding tide will lift all boats, and some of those boats will sail toward Starbucks. And, I think this is in some ways an experiment, and an investment.

    Somebody has to do it, and I'm glad Starbucks is embracing the challenge.

    Regarding my FaceTime video there about how to learn, one MNB reader wrote:

    First time writer, long time reader. This one resonates deep with me. I have worked for my company for 40+ years, which I believe to be a milestone that is seldom achieved this day in age. I started out in retail at the bottom, I bagged groceries for 2 years, before my first promotion. I have since made many “moves” and have achieved what I believe has been an interesting and rewarding career (I will likely retire from a technology role based on the business). What I find interesting about your Tyrone story; technologists (IT Geek types) could be far more valuable if they spent even a week working in a retail store learning about what the customer experience is all about and if they understood how what they build in a technology lab impacts the retail experience and what is on peoples “tables” for dinner tonight. I resoundingly agree with your take. To learn, you have to do.

    And MNB reader Krag Swartz wrote:

    Beautiful lesson told beautifully.  Thanks for sharing this one.

    Finally, from MNB reader Theresa Ruppert:

    You could have been writing my story and actually you have helped to write it.  I have read your column for years.  I joined Amazon Prime because it is more than free shipping. I joined Netflix because it had unique content that  I wanted to watch.  I bought an iPhone because I am now an Apple loyalist. They are no longer just products or services, but have become an integral part of people’s lives.  You really should have been a paid spokesman for the 3 companies.

    For the record, I'm not. But you point about how superior brands become integral to people's lives is spot on.
    KC's View:

    Published on: July 17, 2015

    One of the trade-offs I've made as I've gotten older has been a decision to stay away from doughnuts. I love doughnuts and will continue to indulge from time to time, but I realize that they're not good for me, that the older I get the more jogging I have to do to work them off, and that a general policy of doughnut abstinence probably is best for my long-term health.

    That sort of becomes more of a problem while staying in Portland, because people here really like their doughnuts ... and there are so, so many places from which to choose. In fact, we went to a July 4th party where the dessert was doughnuts, all of them brought in from a bakery called Blue Star. (Let me tell you something. The Blueberry Bourbon Basil was like nothing I've ever tasted before. This could be a problem.)

    Yesterday, an MNB reader named Doug Morales suggested that I find my way to a small place I'd never heard of before, called Pip's Original. Not only were the doughnuts fantastic, I got a business lesson.

    In Portland, the doughnuts shop that everybody talks about is Voodoo Doughnuts, which has combined a lot of savvy marketing, large pink boxes, and an enormous selection of doughnuts often with off-color names into a kind of iconic business. And good for them. The result is lines that often wrap around the block, no matter what the weather or time of day.

    But where Voodoo has an enormous selection of generally oversized doughnuts, Pip's has just six varieties - like cinnamon sugar, sea salt and honey, and another with a drizzle of Nutella - and they're maybe three or four inches across. More to the point ... they're fried to order, which means that everybody has a hot, light, fluffy, delicious and fresh doughnut experience. Who could ask for anything more?

    It occurred to me as I ate my doughnuts, washing them down with excellent black coffee and thinking that Spenser would be proud of me, that this is the best way to compete, especially with an icon. You find each of the competition's strengths, and then do the opposite ... and in doing so, create your own differential strengths.

    Very smart. My compliments to the folks at Pip's. They taught me a valuable business lesson, and they make a helluva doughnut.

    Now, about movie hell ... I cannot tell you how disappointed I was in Terminator Genisys, the rebooting of the venerable action franchise that was launched by writer/director James Cameron, with Arnold Schwarzenegger as a killer cyborg from the future, in 1984. I have find memories of the original, and the immediate sequel, Terminator 2: Judgment Day - they were clever, original, fast-paced, and even thoughtful as they posited a future in which machines have taken over the earth.

    The new version attempts to rewrite the history and the future that were created by the original films, pulling pieces from each of them and reshaping them, in many ways following the model created by the Star Trek reboot. But Terminator Genisys is simultaneously both too self-aware and not self-aware enough ... it creates a confusing patchwork of scenes that plays like a "best of" montage, throws a couple of curves without any real payoffs, and gives us Arnold Schwarzenegger - again - with too little explanation for his reason for being there. (Except that we all know he's there for box office appeal. And he's pretty good.)

    I just thought that Terminator Genisys was generally lacking in any sort of originality. It was there to generate box office, not thought ... and as I said, one of the pleasures of the original films was that they actually were thoughtful.

    Too bad.

    Among the wonderful wines we've had during the past few weeks have been two that were recommended by Morgan at Etta's Seafood in Seattle - the 2013 Cedargreen Chenin Blanc, and the 2012 Cotes de Provence Miradou rose, both of which were excellent hot weather wines that are wonderful when served cold (especially when served with the amazing tuna sashimi and green onion pancakes they make at Etta's).

    That's it for this week. Have a great weekend, and I'll see you Monday.

    Fins Up!
    KC's View: