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    Published on: July 30, 2015

    This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, Kevin Coupe here, and this is FaceTime with the Content Guy, again coming to you from the campus of Portland State University in Oregon, where I continue to enjoy my adjunctivity with the Center for Retail Leadership

    A few weeks ago, while Mrs. Content Guy was visiting me (she doesn't spend the whole summer here), we decided one morning to go for a long bike ride. I shipped my bicycle out so I'd have it anytime I needed it, but we needed to rent one for her. So, we went off to the local bike rental shop.

    When we were there, there was another couple in front of us, and they obviously were not from here, because the guy asked the shop manager if there was anyplace nearby where he could get a cup of coffee. I had to chuckle at this - this is Portland, after all, and all you have to do is throw a rock and you can hit a wonderful coffee shop, not to mention a brewpub, wine bar and/or food store. it's just that kind of place.

    Now, I figured that because of where we were, he'd send the couple over to Stumptown, a local coffee shop that I patronize a lot while I'm here; it was only a couple of blocks away. But instead, he pulled out a map and recommended three places I'd never heard of, all of them across the river on the city's east side.

    Once the couple left, I asked him why he had not suggested the nearby Stumptown, and he practically snorted. "Stumptown? That's a corporation. I don't send people to corporate stores. I send them to local shops," he said.

    Now, I have to admit that this took me a little by surprise. I did a quick online search, and Stumptown has 10 shops - five in Portland, two each in Seattle and New York, and one in Los Angeles. Ten shops ... not exactly in Starbucks' league, in my estimation. Though, to be fair, it is majority-owned by a private equity group that bought its 90 percent stake from the founder a few years ago.

    But in almost every possible way, Stumptown is a local animal, albeit a local animal that has made good. Except that there seems to be a kind of overarching perception on the part of some people that once you've made it this good, you're not really of the city anymore.

    I've asked around, and this is not a unique perception. People here are so radical in their definition of local that they become suspicious of anyone who does so well for themselves that they spread their wings and go beyond the city limits. When they say local, they mean local.

    I have to admit that I find this to be kind of charming, if a little disconcerting. Portland may be a city of fascinating diversity, but in some ways, it is still a small and somewhat parochial town.

    But I also think it teaches an important business lesson - which is that it sometimes doesn't matter what the reality is. Perception is what matters - and almost always, it is the perception of the customer that matters most. We may think of ourselves as being local, but if the customer doesn't, it does not matter ... and so we have to adjust, and deal with reality.

    Good lesson.

    That's what's on my mind this Thursday morning. As always, I want to hear what is on your mind.

    KC's View:

    Published on: July 30, 2015

    by Kevin Coupe

    They say that you can't go home again. But that assumes that you ever leave...

    The New York Times reports that "an analysis of census data by the Pew Research Center has found that 18- to 34-year-olds are less likely to be living apart from family members than they were even during the depths of the recent recession, the worst economic downturn since the 1930s."

    The story goes on:

    "In 2010, according to the study, 69 percent of 18- to 34-year-olds lived independently. During the first four months of this year, just 67 percent of that same age group was living independently. From 2010 to April 2015, the share of young adults living in their parents’ homes has increased to 26 percent from 24 percent, the study said."


    "In terms of sheer numbers, there are more young adults today than when the recession hit: The 18- to 34-year-old population has grown by nearly three million since 2007. But the number of them heading their own households has not increased, the study said.

    "In the meantime, the national unemployment rate for young adults declined to 7.7 percent in the first four months of this year, down from 12.4 percent in 2010. While people with college degrees are more inclined to secure higher-paying jobs, the study found that even college-educated young adults were more likely to live with their families today than in 2010."

    The problem with this trend, of course, is that it points to a broader economic problem that will impact the country - young adults who are unemployed, under-employed or underpaid - or just unwilling to leave the nest - are not spending money on housing, food, entertainment, and other things that help drive economic prosperity.

    And so right now, it may just be kids who won't leave home. But it could be an Eye-Opening problem with serious implications not that far down the road.
    KC's View:

    Published on: July 30, 2015

    MarketWatch reports that Whole Foods yesterday announced that its first five "365 by Whole Foods Market" stores will open between now and 2017 in Bellevue, Washington; Houston; Portland, Oregon; and Santa Monica, California, and that the first of the smaller, value-and-technology driven stores will be in the Silver Lake neighborhood of Los Angeles, during the second half of 2016.

    According to the story, "Whole Foods Market currently operates 24 locations in the Los Angeles area. The company made the strategic decision to renegotiate the lease in development for the Silver Lake location, converting it from a Whole Foods Market to a 365 by Whole Foods Market store. In doing so, the new store will be able to open its doors more quickly, capitalizing on the operational efficiencies and talented team member base already available in the area."

    Meanwhile, as Whole Foods was laying out its 365 plans, it also was announcing that its same store sales for the most recent quarter were up just 1.3 percent, described by the Wall Street Journal as "its weakest growth since 2009 during the economic downturn."

    The Journal story notes that the sales issues "were exacerbated in the final weeks of the quarter after New York City officials found the company had mislabeled weights of freshly packaged foods like vegetable platters and chicken tenders, leading to overcharges of under $1 to nearly $15 an item."

    While co-CEOs John Mackey and Walter Robb apologized for the mislabeling, saying that it was the result of poor training and promising that the situation would be rectified, Mackey sounded a different note yesterday, saying that the probe by the NYC Department of Consumer Affairs (DCA) made them "feel like victims."

    “It is just something that went viral in the media -- it has hurt our trust,” he said on a conference call. “We don’t know exactly why the DCA went after Whole Foods like this.”
    KC's View:
    I can tell you why.

    Whole Foods was mislabeling items and overcharging for many of them. Also probably undercharging for some, but in life, you don't get credit for that.

    Also, when you have a public image like Whole Foods does, it is to be expected that you may have a target on your back. When you screw up, you get called on it.

    I thought from the beginning that it was classless for Mackey to essentially throw his NYC employees under the bus when news of the investigation broke. I've been told that Whole Foods employees in other areas of the country took note of what he did, and it hasn't been great for morale. And I think that continuing to play the victim card is definitely the wrong way to go ... I suspect that it will just prompt other consumer affairs departments around the country to check their Whole Foods.

    As for 365 ... I remain intrigued, if not entirely persuaded. These are smart guys, so there is a every possibility that the format will be a hit. But it also is possible that this is a desperation move that could go over like Fresh & Easy.

    But if it is a hit ... even a minor one ... I wonder if Whole Foods will start looking at newly converted Haggen stores in the western US as possible future locations for the 365 format. (You can't think too far ahead, y'know...)

    Published on: July 30, 2015

    Colloquy is out with a story suggesting that it is "inevitable" that click-and-collect services will become "commonplace" in the US.

    Part of the reason is shopper convenience, but the story suggests that there is another reason for retailers to embrace and promote this option - its ability to provide a greater amount of actionable shopper data that can be used to a competitive advantage.

    Analysts, the story says, point out that "click-and-collect has the potential to allow grocers to delve more deeply into shopper data, gathering useful loyalty and behavioral information and creating the opportunity to encourage specific behaviors ... One of the clearest of those opportunities is the ability to capture online behavior differently than it can be done in-store. If a customer walks down the cracker aisle in a store but then changes her mind, the grocer likely will never know; with click-and-collect, grocers know what products a shopper viewed or considered but abandoned, can spot patterns for items that frequently get searched but not purchased, and have the opportunity to follow up with shoppers or watch their decisions over time to learn more.

    "The data also allows grocers to broaden shoppers’ selections within categories – suggesting baby wipes to a click-and-collect customer who has selected diapers, for example – as well as steering them toward another product in a category when something has been abandoned. When the online shopper puts a jar of applesauce back on the shelf, virtually speaking, the click-and-collect system can suggest another brand, a better deal or an alternate package size."

    To read the entire analysis, click here
    KC's View:
    Add to this the fact that click-and-collect is generally considered to be the fastest way to get to profitability if you are doing e-commerce ... it avoids all the costs associated with delivery, and provides a specific and useful service to those inclined to use it.

    As for actionable data ... I think that's great. Though we always have to remember that there is an enormous gap between having actionable data and actually acting on it.

    Published on: July 30, 2015

    The Puget Sound Business Journal reports that Instacart is expanding its reach in the Seattle area by teaming up with Central Co-op, described as "a popular natural foods store" in the Capitol Hill neighborhood. To this point, home delivery provider Instacart has been providing shopping services for Whole Foods and Costco in the Seattle area.

    The story notes that while Amazon Fresh has a membership fee of $299 per year, Instacart costs $99 annually.
    KC's View:
    I hope Instacart likes doing business with small companies in need of an internet solution. Because at some point in the relatively near future, a number of the big companies that were in need of an internet solution are going to decide that they don;t need Instacart anymore, and they're going to take control of their own e-destinies.

    And when that happens, the house of cards falls apart. The question is, which happens first - the abandonment of Instacart by a number of retailers, or the IPO/sale of Instacart designed to make the founders and initial investors rich?

    Published on: July 30, 2015

    The Phoenix Business Journal reports that fast feeder Wendy's in launching a beta test of its mobile app in Phoenix this month, saying that "users can place an order through the app and turn on the mobile device’s Bluetooth. The restaurant then is alerted when the customer is within range, and the order can be fresh and ready for the customer."

    For a limited time, Wendy's is offering a free Frosty to customers who download and use the mobile app.

    Early results suggest that users will save about 30 seconds in the drive-through, and as much as five minutes in-store.

    The intention is to also test the app in Austin and Portland, the story says.
    KC's View:
    This sounds suspiciously like the Starbucks mobile app, and I say that as a compliment. I've said here before that I think the Starbucks app, especially as it becomes more robust and allows for remote ordering, is a terrific piece of behavior-altering engineering ... and more companies should be thinking about how to offer something similar.

    Published on: July 30, 2015

    CNBC has a story about two of the country's top retail CEOs, noting that "as Greg Foran and Brian Cornell mark their one-year anniversaries at Walmart U.S. and Target next month, they've each made bold decisions that - although they caused short-term pain for their companies' bottom lines - should better position them for top-line gains moving forward.

    "For Target, that meant exiting its newly launched but money-sucking Canada business, and parting ways with its longtime merchandising chief. At Wal-Mart, it was lifting the minimum wage for thousands of its U.S. workers, in hopes of making its stores more appealing to shoppers.

    "The question now is whether they can capitalize on the momentum they've started to build, particularly as they compete for a similar customer base in overlapping categories.

    "Although both retailers cater to a still-struggling consumer, the financials are starting to trend in their favor. Both big-box stores posted two consecutive quarters of traffic gains in the most recent periods. They've also recorded three straight quarters of same-store sales gains, following a string of flat or lower results."

    But, the story emphasizes, both have much work left to do in a competitive environment that is fast changing, in which both companies are looking at grocery as a driver of sales and traffic, and that requires a focus both on price and other differential advantages that they hope will redefine their companies.

    You can read the entire story here.
    KC's View:

    Published on: July 30, 2015

    • The Associated Press reports that Ahold USA has joined the Coalition of Immokalee Workers' Fair Food Program, which "requires its Florida tomato suppliers to increase farmworker pay and protect workers from forced labor and sexual assault."

    According to the story, "Ahold USA joins nearly a dozen other corporations, including Wal-Mart, McDonalds, Burger King, Subway, Chipotle, Whole Foods Market, Trader Joe’s and Yum Brands - the company whose restaurant chains include Taco Bell, Kentucky Fried Chicken and Pizza Hut."

    Ahold USA COO James McCann said in a prepared statement that "the cornerstone of this commitment is the Ahold Standards of Engagement, which commit our companies’ suppliers to these values. The Fair Food Program is a time-tested leader in improving the lives of agricultural workers, and we have observed the Program’s success over the past several years."

    • The Seattle Times reports that even as Starbucks is "in the midst of a big effort ... to push its lunch options, a key driver of new revenue for the coffee company," its stores in Seattle and throughout the Pacific Northwest "have temporarily run out of some lunch items, as the coffee giant deals with a problem at one of its suppliers."

    A spokesperson for the chain said that the supplier has not been meting its standards, and that they are working to resolve the issues.
    KC's View:

    Published on: July 30, 2015

    • The Minneapolis/St. Paul Business Journal reports that "Alan Wizemann, one of Target Corp.'s top digital technology leaders, plans to exit the company.

    Tech news site Re/code first reported the departure, saying that Wizemann, who leads and its mobile app businesses, told his team Tuesday of his plan to leave. 'No plans as of yet,' he told 'Open to potential opportunities'."

    The story notes that "Wizemann has worked with Target since 2012 and still lives in Portland, Ore., where he's launched several startups. One of those companies, Facebook-based e-commerce business ShopIgniter, sold last year to a Seattle advertising technology firm."
    KC's View:

    Published on: July 30, 2015

    ...will return.
    KC's View: