retail news in context, analysis with attitude

Published on: August 25, 2015

by Michael Sansolo

To celebrate the 40th anniversary of the day we met, my wife decided to post a 1975 photo of me on Facebook. It reminded me that while I’ve kept the girl, I clearly have lost a lot of hair.

Incredibly, I no longer own the shirt I’m wearing in the photo, although my wife wasn’t completely sure of that. Both she and my children remind me repeatedly that some of my clothing has long since passed its prime.

(FYI: I am keeping that Mets 1986 World Championship shirt until my team actually rewards me with another year to celebrate. Thank God I’m not a Cubs fan!)

But there’s a serious side to this: times roll on and things change. We see it in “Throwback Thursday” photos of our homes, our cars, our stores and even the products we sell or eat. Fashions, taste and technology are constantly changing and we need change with it.

Not surprisingly, it happens with even the newest technologies. A recent Pew study examined how Americans are using social media and unsurprisingly, patterns are changing. The skyrocketing growth of Facebook has leveled off while messaging apps like Kik and What’s App, and social media sites such as Instagram and Pinterest, are growing at a much faster pace. And those changes are happening among all demographics, not just Millennials.

For businesses, there’s a lot to consider in those numbers.

First off, we need to stay current with technological change or risk looking as silly as I did in my throwback photo. Let’s hope no one out there is running their social media strategy through My Space or Friendster or offering Internet service through dial-up in a store.

Many companies have mistakenly assumed social media is free since it’s on the Internet. As experience is constantly showing up, we need well thought out strategies for social media and that requires staffing and budgetary support.

Part of that support is recognizing that a simple website is an insufficient Internet presence and that a social media strategy must evolve with the web itself.

The second part of the Pew study is a reminder of just how powerful these social sites have become. Granted, Facebook’s growth is leveling off, but the reason may be that there’s no place left to grow. Nearly three-quarters of Americans currently are using Facebook so it’s increasingly harder to find people to add.

More importantly, 70 percent of adults check Facebook daily and almost all do so more than once a day. It’s hard to imagine any other medium that even comes close to that kind of level of interaction.

Those numbers are a powerful reminder of just how important social media has become for business. If your marketing strategy relies too heavily on newspaper ads, television or radio you too need to pull out an old photo and contemplate change. While those media can and should be part of your strategy, you need consider your digital connections and how to make sure they are constantly up to date.

Retro is great for Chuck Taylor sneakers, but horrible for my hairstyle or your marketing plan.

Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.

Published on: August 25, 2015

by Kevin Coupe

This is the kind of story that makes me crazy.

A New York City website called The Gothamist has a piece headlined "Whole Foods Is Killing Our Beloved Fairway Markets," in which it complains that the company "has amassed $300 million in net losses in the past five years" and is "having difficulty staying relevant in the gourmet grocery store boom, with big names like Whole Foods and Trader Joe's eating away at Fairway's base."

It remains to be seen, the story says, if Fairway "can make enough noise to stay afloat. At least they have more reasonable pricing going for them and a more favorable reputation on top of that."

All of which is true ... except that the premise seems to be that Fairway is a victim. And I would argue that Fairway, rather, is the architect of its own growing irrelevance - focusing on growth rather than excellence, and allowing other companies to disrupt its long-established business model by not continuing to innovate as the retail market became more robust. It didn't help that the founding family stepped away from the business after they sold it to a private equity group; these days, the betting seems to be that Fairway's eventual redemption could come in the form of a bigger retailer stepping in to acquire some or all of its stores.

Let's me say it again. Fairway is the architect of its own irrelevance. It is not a victim.

And this is an Eye-Opening scenario that ought to capture the attention of any retailer who thinks he or she has it all figured out, that the business has some sort of unassailable advantage.

There's no such thing. There are only assailable advantages.

In these moments, I always remember what Norman Mayne of Dorothy Lane Markets - a company often referred to as being both iconic and legendary - once told me. That's all very nice, he said, but "legendary is what we were yesterday. Today we have to earn it all over again."

And by the way ... that's exactly the message that Amazon founder/CEO Jeff Bezos is sending to his troops when he utters one of his corporate mantras - that "today is day one."

Published on: August 25, 2015

The United Food & Commercial Workers (UFCW) said yesterday that it has filed charges against Haggen, Albertsons and Vons, saying that the three chains "violated the collective bargaining agreement and deprived bargaining unit members of their rights under the contract in the way it handled and implemented the sale of Albertsons and Vons stores to Haggen. These violations caused each affected employee to lose all their contractual rights, including but not limited to, seniority, wages and benefits they enjoyed at Albertsons."

In a prepared statement, Rick Icaza, president of UFCW Local 770, said that “these companies have misled and mistreated their employees either through gross self-interest or gross incompetence, either of which is unacceptable. Real people are suffering loss of wages, health care, seniority, and outright loss of their jobs. We will do everything in our power to hold management accountable and return our members to their jobs with full benefits intact.”

The charges, of course, are related to the sale of more than 140 stores to Haggen when Albertsons acquired Safeway; Haggen has encountered nothing but trouble since it bought those stores, with conversions that some believed were haphazard and pricing that many found to be noncompetitive, resulting in precipitous drops in traffic, sales and profits - and the closing or sale of some stores that were in particularly bad shape.

An Albertsons spokesperson said that the charges were without merit; Haggen has not yet commented on the lawsuit.

Published on: August 25, 2015

USA Today reports that Target plans to test a new cafe concept in 14 stores this fall, in which shoppers will "be able to choose from a wider array items, including 'artisan style' pizza, fresh salads with ingredients such as kale and edamame, and pressed juices with beet and carrot," using such foods to replace traditional junk food of old.

According to the story, "Starting in October the company will roll out a new cafe concept  — fast-casual chain Freshii will go into nine stores, while Pizza Hut will open restaurants in three stores featuring a limited menu of 'artisan' pies, such as margherita and barbecue chicken. Two Minneapolis stores will get outposts of D'Amico & Sons, a local Italian restaurant whose founders have been semifinalists for a James Beard award multiple times and whose menu includes toppings like organic goat cheese and arugula."

Tina Tyler, Target's chief stores officer, tells the paper that "Target decided to go in a new direction with its cafes after hearing from customers who wanted higher-quality food and more of a fast-casual atmosphere ... Currently, about 40% of Target customers visit the cafe while shopping. But the test is less about boosting that figure and more about showing customers that the brand is serious about health and wellness."

Published on: August 25, 2015

Consumer Reports is out this morning with study saying that in its "new tests of ground beef, 18 percent of the beef samples from conventionally-raised cows contained dangerous superbugs resistant to three or more classes of antibiotics used to treat illness in humans compared with just 9 percent of beef from samples that were sustainably produced."

The magazine says that its investigation "comes as food poisonings are striking an estimated 48 million people in the U.S. each year with beef being a top cause of outbreaks. Compounding the issue, Americans often prefer their beef on the rare side. The grinding process used to produce ground beef can distribute bacteria throughout the meat and if it’s not cooked properly through to the center, the potential for getting sick increases."

The report goes on to say that "more than 80 percent of the conventional beef samples contained two types of bacteria," that "nearly 20 percent of the beef samples contained C. perfringens, bacteria that causes almost a million cases of food poisoning annually," and that "ten percent of the beef samples contained a strain of S. aureus bacteria that can produce a toxin that can make people sick – and cannot be destroyed even with proper cooking."

The entire study can be read here.

Published on: August 25, 2015

The New Yorker has an assessment of the case being made by a writers group called Authors United, which sent a letter to the US Department of Justice requesting that the government launch an antitrust investigation into how Amazon dominates and controls the publishing business.

"It is perhaps the writers’ lack of legal expertise that has given them the freedom to put forth what antitrust experts described to me as a highly unorthodox argument: that, even though Amazon’s activities tend to reduce book prices, which is considered good for consumers, they ultimately hurt consumers," the story says. "The authors are, in essence, trying to make the case that Amazon is bad not only for writers, but also for people who buy stuff on the site—and they’re taking this approach for good reason."

While antitrust law used to focus on reducing big companies' ability to abuse their power by squeezing suppliers, more recently it has focused on how such companies could use market dominance to affect consumer choice and market prices. Therefore, Authors United needed to make the case that low prices are not necessarily the best thing for the consumers; the argument is that low prices come with reduced choice and even a stifled intellectual and artistic environment.

"Authors United’s specific argument—that Amazon’s actions are bad for consumers because they make our world less intellectually active and diverse—is unorthodox in its resort to cultural and artistic grounds," the story says, and it is complicated "by the fact that Amazon makes it easy for authors to self-publish and have their work be seen, without having to go through such traditional gatekeepers as agents and publishers; Amazon might argue that this allows for more free flow of information and ideas."

Writer Douglas Preston, who has been an organizer of Authors United, concedes that the Department of Justice may dismiss the group's request as uninformed. But, he suggests, it makes sense to continue to press the argument,because the writers have a larger mission: “We hope to show the public that getting products faster and cheaper isn’t necessarily the greatest good. It comes at a human cost.”

You can the read the entire piece here.

Published on: August 25, 2015

Fortune reports that as the stock market plummeted yesterday, Starbucks CEO Howard Schultz sent an email to the company's far-flung baristas, urging them "to be extra patient with customers ... given the dramatic stock market swoon that no doubt has left countless coffee addicts anxious about the state of their retirement holdings."

"“Today’s financial market volatility, combined with great political uncertainty both at home and abroad, will undoubtedly have an effect on consumer confidence and perhaps even our customers’ attitudes and behavior. Our customers are likely to experience an increased level of anxiety and concern ... Let’s be very sensitive to the pressures our customers may be feeling, and do everything we can to individually and collectively exceed their expectations."

In its report about the memo, the Washington Post called it "bizarre" in its headline, and added, "It’s unclear just how many bad days were saved due to Starbucks’ employees’ added compassion. But the campaign is part of a broader push to catapult Starbucks into the spotlight with a reputation that’s hard to buy: As a warm-hearted corporate behemoth who always keeps Americans’ (caffeine and personal) needs in mind."

Published on: August 25, 2015

Reuters reports that discount supermarkets Aldi and Lidl continue to grow their UK market share, and together now have 9.7 of the market there, up from 8.4 percent a year ago.

Compare that to how the UK's "big four" retailers have performed in that same period.

Tesco's market share is down 0.9 percent from 28.8 to 28.3 percent; Asda is down 2.5 percent from 17.2 to 16.6 percent; Sainsbury is down 0.1 percent from 16.4 to 16.3 percent; and Morrisons is down 1.1 percent from 11 to 10.8 percent.

Published on: August 25, 2015

Instacart announced this morning that "it has expanded to Indianapolis, its 17th city. Beginning today, customers can order from Whole Foods Market, Costco (no membership needed), Marsh Supermarkets, Georgetown Market and Petco stores and have everything delivered by Instacart in as little as one hour."

Instacart describes itself as changing "the traditional grocery delivery space by connecting customers with personal shoppers who shop for and deliver grocery orders in as little as one hour," thus eliminating "the need for costly infrastructure such as inventory, warehouses and trucks."

The company charges a $3.99 fee for orders of at least $35, but also offers a $99 annual membership.

Published on: August 25, 2015

The New York Times had an excellent piece the other day about how Ben & Jerry's, the iconic ice cream brand founded by a couple of ex-hippies with a desire to change the world as much as to sell great ice cream, did not lose its soul when it was acquired by Unilever in 2000 for $326 million.

In fact, not only has Ben & Jerry's maintained its commitment to progressive social change, but it even has pushed its parent company to "become a more progressive multinational."

Fascinating piece, and you can read it here.

Published on: August 25, 2015

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

• Marketing Daily reports that "according to a recent Nielsen survey conducted by Harris Poll, 95% of U.S. pet owners consider their pets to be part of the family. Two generations are spending the most: Millennials (65% own pets) and Gen X (71% own pets), according to the poll, which surveyed 2,205 U.S. adults, 1,323 of whom have at least one pet, online May 20-26."

The story goes on to note that "when it comes to which types of pets are in households, 71% of pet owners say they have at least one dog; half (49%) have cats; one in 10 have fish (11%); and less than one in 10 have a bird (8%) or some other type of pet (9%).

While I'm always careful to refer to our two dogs as pets and not family members, I do think you can tell a lot about people by the names they give their pets. In our case, our two yellow labs are called Buffett and Parker. Enough said.


• Crain's Chicago Business reports that TreeHouse Foods "is reportedly in talks to buy ConAgra's private-label food business for around $3 billion ... CEO Sam Reed told investors he's interested in acquiring ConAgra's struggling Ralcorp business, which ConAgra CEO Sean Connolly said in June he is seeking to divest."


• The New York Times reports that Tesco "has received three separate binding bids for its South Korean unit from a consortium of Affinity Equity Partners and KKR & Co, Carlyle Group LP, and MBK Partners." The bids have all come in at around the equivalent of $5.9 billion (US), and insiders say that Tesco is likely to choose a preference "as early as this week."

Published on: August 25, 2015

• The Chicago Tribune reports that Ryan LaRoche, currently head chef at the Blue Duck Tavern in Washington, DC, has been named Executive Chef and Vice President of Culinary for Mariano's, which just opened its 33rd store in the Chicago-area market.

Published on: August 25, 2015

Got the following email from an MNB reader about a familiar subject:

One of the things I have not seen discussed is the source of many objections to GMO products – it is not, actually, an objection to the product itself or to the genetic technology that enabled it to be created, at least not directly.

It is that many GMO products (particularly grains and other field crops) were specifically altered to allow massive use of pesticides and other agricultural practices that would kill an ordinary crop. There is mounting evidence that this practice has been causing weeds to evolve into “super weeds” and is the primary suspect in the major loss of pollinator insects such as bees. As with excessive antibiotics in people or animals or other  such practices of different kinds, it is not the immediate outcome (bigger crop yields, animals who resist infection, people who recover from something minor a little faster) that is the problem. It is the longer term effects – weeds that can no longer be killed at all, creating a long term negative outcome, or over-used antibiotics that caused “super bugs” to become resistant so that serious illness can no longer be treated easily.
 
Combined with the rather high-handed attitude of some of the seed companies (where a GMO crop that literally blows over to an adjacent field and self-seeds or contaminates another crop causes a farmer to be successfully sued for patent infringement because of the natural behavior of the plant – in effect being held financially responsible for being downwind) there are a lot of legitimate questions here that have nothing to do with the product and a lot to do with the ability of educated consumers who want to discourage such a direction through market based product choices..
 
I totally agree with transparency. Always. Whether it is in hiring, worker treatment, recalls, agricultural and land practices, or the content and practices of consumer products manufacturing. Not everyone cares. Yet. But that is the usual direction of history.
 
It’s called honesty.

Agreed.

Published on: August 25, 2015

I write this at the risk of jinxing what has been an incredible run...

But it must be pointed out this morning that the New York Mets are in first place in the National League East ... 5.5 games ahead of the second place Washington Nationals ... eight games above .500 ... having just come off a road sweep of the Colorado Rockies ... and last night having beaten the Philadelphia Phillies 16-7 by hitting eight home runs (including one by David Wright, playing his first Major League game in 133 days, and two by Wilmer Flores, who almost got traded a few weeks ago).