retail news in context, analysis with attitude

Published on: August 26, 2015

A guest column by Russell J Zwanka

A Note from the Content Guy: I've known Dr. Russell Zwanka for a long time, and these days we share a couple of common experiences - we've both written books, and we both teach at the college level. Though, to be fair, he's a real college professor - teaching Marketing and Strategy in the School of Business at State University of New York at New Paltz. (I just play one during the summer.)

This column is adapted from his book, "A Marketing Manual for the Millennium," and I think it is particularly relevant considering all the discussions we have about marketing to various demographics. Enjoy.


It’s time for the Centennials.

You heard correctly! As soon as we totally exhausted the phrase “attract Millennials”, another group has come through and stolen our focus. It’s a group that will probably impact the next twenty years even more than Millennials.

But, who is this next group and why do we care? Where did they come from? What are their dominant traits? What are we going to do about them? When will they be in “power” in our workforce?

They are the Centennials and they are going to circle us right back to the pragmatic days of the “GI Generation”. We are going full-circle, and it’s going to be a fun ride!

First, a definition: The Centennials are the generation born from 2000 to today. They will replace the Millennials as the major buying force by 2050. So, yes, we still need to focus on Millennials; but the striking shift of culture being brought by the Centennial generation will have an impact long before 2050.

Key points of the Centennials:

• The Centennials are nothing like the Millennials. Where the Millennials were the “anti-Boomers”, the Centennials bring us full-circle to a generation that values teamwork, peer alignment, spending only what you earn, integrity, and resolve. Millennials have been termed the “selfie generation”, where the Centennials value being one unified group and only touting individual strengths as a way to contribute to the “greater good”. The next twenty years will move us right back out of “look at me” to “let’s do this ….together”.

They are growing up in tough times, and it will impact their actions the rest of their lives. Millennials had the 80’s generation raising them, where “greed is good” and work-life balance was more a saying than an actual practice. It shaped the Millennials into “boomeranging” to the opposite traits with a mixing of the same traits. A hybrid of sorts. More focused on life balance than work-life, while also focusing on living autonomously through each other in social media. If you do not see 50 “likes” in ten minutes after posting, it is tragic! Selfie, selfie, selfie! But, Centennials? They love social media as well, but have seen an economy hit the skids, a contraction to buying habits reminiscent of the great Depression, even a massive bi-furcation of the economy, with the wealthy gaining more wealth and the middle class plunging into poverty-level spending. These events have impacted an entire generation.

• The Centennials will have major “risk avoidance” in their make-up. They have seen their parents lose their whole retirement, their college funds, go into massive debt. The Centennials are determined not to get to that point. Centennials will truly be a “sharing generation”, in the sense of avoiding ownership. Ownership means tying up your cash, and you never know when you’re going to need cash. Share an apartment, share your BnB, use Uber for rides and for income, rent a gown, rent jewelry; anything to avoid placing money in a hard asset that cannot be easily liquidated. Spend less than you earn.

• “Retail Therapy” is gone. In the past, you feel bad today? Go shopping. Makes you feel better, perks you up. Something new and shiny! Not anymore. It started leaving our DNA with Millennials (notice the empty malls?) and will be totally eradicated by the Centennials. Impulse buying will be at an all-time low with Centennials. You buy within your means, you buy necessities, and you focus more on experiences than products. I’ll repeat, it is more about the experience than the product!

• Diversity had better be in your DNA. In 2006, the United States saw record births, the most births since the Baby Boomer generation. The difference? 49% of those births were Hispanic. Add the massive changes evolving around race relations, sexual preference, race preference, embracing other points of view, and we are on the verge of the largest move towards a diverse culture than anytime in history. It had better be in your company culture to embrace and respect diversity in all measures: employees, customers, products, seasons, holidays, etc. Everything matters!

Changes are coming, and they are traveling at light speed! Centennials are already impacting how we think, how we act, and how we are planning for the future. In fact, you could say the buying patterns developed in the last few years are the “new normal”. A time is upon us that values experiences, values teamwork, values the greater good, and values diversity! Hop on the wagon and let’s take a ride!


Dr. Russell J. Zwanka teaches Marketing and Strategy in the School of Business at State University of New York at New Paltz.  Dr. Zwanka is currently CEO at Triple Eight Marketing, and previously taught in the Schools of Marketing and Management at Siena College in Albany, New York.  Before entering the academic world, Dr. Z led the merchandising, marketing, advertising, procurement, and all customer engagement areas for multiple organizations in the United States and Canada.  Dr. Zwanka holds a Doctorate in International Business from the International School of Management in Paris, France. He also holds a Masters of Science in Management from Southern Wesleyan University, and a Bachelors of Science in Psychology from the University of South Carolina. "A Marketing Manual for the Millennium" is available from Amazon here.

Published on: August 26, 2015

Advertising Age this morning reports that while Amazon's "buzz" score, as tracked by YouGov BrandIndex, dropped after the New York Times reported last week about sometimes "punishing" workplace conditions there, it did not have much impact on whether people would shop there.

According to the story, the reports "didn't rock the way shoppers planned to buy ... Seventy percent of consumers surveyed said they would consider shopping at Amazon next time they wanted to make a purchase from a retail store, down from 72% before the story was broke."

The question that remains, YouGov BrandIndex says, is whether the story has "legs" and gains any sort of traction in the media and with the consuming public, or whether it fades from memory.

Published on: August 26, 2015

Reuters reports that Amazon announced yesterday that its Prime Now service - which offers one and two hour delivery time frames - "will begin delivering wine, beer and spirits to U.S. customers for the first time."

Amazon also said that it is expanding the Prime Now service to its home city of Seattle. The Reuters story says that "the company opened two facilities in Seattle and Kirkland, Washington, to handle Prime Now deliveries."

The story notes that Prime Now "facilitates integration of the retailer's grocery delivery service, Amazon Fresh, which has been slower to expand to new markets."

The Seattle Times reports that "Prime subscribers won’t need to pay additional fees for delivery within a two-hour window in Seattle, as long as the order is more than $20. (In other U.S. cities, the minimum order is $15. Amazon said it is experimenting with the higher price in Seattle.) One-hour delivery will cost $7.99."

In other Amazon news, Engadget reports that in the UK, Amazon has decided to waive all delivery fees for any orders shipped to one of its pickup locations, which have been installed in some 13,000 places, including railroad and Tube stations, gas stations, and post offices.

And GeekWire reports that Amazon appears to be preparing for a new offering that would "throw its weight into the crowded market for delivering meals from restaurants to workplaces and homes."

The story says that Amazon "has been testing the service by allowing its own employees to order meals from restaurants in conjunction with the new Prime Now delivery service in Seattle, according to delivery drivers and others with knowledge of the initiative."

GeekWire goes on: "Amazon has nibbled around the edges of restaurant delivery in the past. For example, the current Amazon Local app lets users in Seattle order food for carryout, but Amazon does not offer its own delivery through that app. The company’s AmazonFresh grocery delivery service offers pre-made restaurant meals that customers can heat up at home.

"Amazon also delivers some meals from third-party sellers in New York City, but the options there are limited to two gourmet grocery stores and a local bakery, and don’t include other local restaurants. But Seattle appears to be the first market where Amazon is experimenting with full-blown restaurant delivery."

Published on: August 26, 2015

The Boston Globe has a story about how Market Basket is performing, one year after the employee and consumer protests that roiled the company even as two members of the owning Demoulas family were feuding and fighting over the future of the company. (Arthur T. Demoulas, who was supported by employees and shoppers, end up winning the end game, returning to the CEO chair after being fired by the board of directors.)

According to the story, "New stores are up and running, operations are more efficient than ever, and, according to Market Basket officials, the company is having little trouble in paying back the debt it took on last year to settle a decades-long family rivalry and return the chain to normal."

The Globe elaborates: "Market Basket has opened five new stores that had been delayed by the corporate infighting since Arthur T. returned to power. The company has plans to open three more. Market Basket is on pace to do nearly $5 billion in sales this year, according to company officials.

"And the biggest fear of many observers—that the debt taken on to finance last summer’s sale would prove cumbersome, forcing Market Basket to jack up its renowned low prices or shirk on its lauded employee benefits—seems to have been misplaced. The grocer had famously never taken on debt prior to last year.

"Its prices remain lower than its competition, according to independent studies (though they have grown year-over-year, according to another study), and the company has put hundreds of millions of dollars into retirement accounts and bonus checks since last year. What’s more, David McLean, Market Basket’s director of operations, said Market Basket is ahead of schedule on paying back the debt."

Published on: August 26, 2015

The Oregonian has a piece about Zupan's, an independent retailer with a strong food culture with four stores in the Portland market.

CEO Mike Zupan tells the paper that "what we need for our stores to succeed is people who enjoy food, enjoy cooking, have discretionary income, and enjoy life." He says that while Zupan's often gets portrayed as being high-priced, it is not a fair description because it implies that everybody is selling the same products. Zupan's buys and sells higher quality products, he says, and so it isn't accurate to compare it to WinCo, which does low prices better than anyone else.

""Our stores are for everybody – everyone can shop our stores," Zupan says. "Maybe once a week, once a month, a few times a year. They will seek us out for the specialty items ... People say, 'I love your store – I go there when I need something special.' And I say, 'Don't you need something special every day?'"

Which essentially is the Zupan's value message - that everybody can and should eat better, and that it is worth spending a little bit more money to get much better food.

"Everyone in our industry that knows food kind of laughs at how successful at Trader Joe's has been with their marketing at quality and price," he says. "I think that you can't have quality olive oil for $3.99. You can't have good quality wine for $2.99. The process for making the product is not the same."

And if Zupan seems skeptical about the Trader Joe's value proposition, he also has some questions about Whole Foods' new 365 concept: "It's an interesting move," he says. "I think it devalues their brand because it's going to be more of a price-driven format around their private label."

Published on: August 26, 2015

The New York Times reports that the US Food and Drug Administration (FDA) has ruled that a small manufacturer called Hampton Creek cannot sell a product it calls mayonnaise using the brand name Just Mayo because it violates "federal regulations related to standards for mayonnaise and proper labeling."

The reason: Just Mayo does not contain eggs, which federal regulations say mayonnaise must. Instead, Just Mayo contains alternatives designed to simulate egg yolk ... and so the company has to come up with another name for the product.

However, executives at Hampton Creek say they are engaged in an ongoing conversation with the FDA that they hope will lead to some sort of compromise.

Published on: August 26, 2015

USA Today is reporting that while the number of US Starbucks locations serving beer and wine during the evening hours has grown to 70, the company has much bigger goals for the concept - it expects to add it to some 2,000 stores and see it add $1 billion in sales to the company's bottom line by the end of the decade.

Published on: August 26, 2015

Crain's Chicago Business reports that when Target opens a new Target Express store in the old Fox & Obel space in the city's Streeterville neighborhood, it's hoping to be able to find a way of allow customers to have a drink while they shop.

According to the story, Target "has applied for licenses that could let shoppers drink while they buy sheets and DVDs ... It's unclear whether the licenses would allow Target to set up a bar in the TargetExpress, or have patrons truly immerse the drinking experience in with the shopping experience."

At the same time, Advertising Age has a story about a new design and development showroom at the company's corporate headquarters in Minneapolis that is "keeping everyone from top brass to marketing and public relations clued-in to the new direction of the brand." The facility, Age Age writes, reflects the company's goal - which is to move away "from being all things to all people while it builds up its omnichannel offerings, and instead focus on four core areas where the brand can stand out: style, including home, apparel and other products; baby, encompassing clothes and gear; kids' clothes and toys; and wellness, a category that the chain is still defining, but covers things like organic food, health products and green cleaning supplies."

It is an interesting story about how Target is trying to change its culture, and you can read it here.

Published on: August 26, 2015

• Kroger said yesterday that "it will hold open interviews nationwide on Tues., Sept. 15, for all veterans and their family members.  Nationwide, the company is hiring to fill an estimated 20,000 permanent positions in its supermarket divisions."

The company says that "veterans and their family members need only to fill out on application online at jobs.kroger.com by Sept. 13, and then return to a store on Sept. 15, between 10 a.m. and 1 p.m. (no appointment necessary)."

Kroger says it has hired "more than 6,000 veterans in 2014, and has hired more than 29,000 veterans since 2009 as part of its commitment to active duty troops and the nation's 23 million veterans through 'Honoring Our Heroes,' a multi-faceted program the company designed to show its deep gratitude."


• The Wall Street Journal reports that Burger King is suggesting a true with longtime rival McDonald's that would result in a combination of two signature products that would be called the McWhopper. The move - conceded to be a publicity stunt - is "aimed at generating awareness for Peace Day, which takes place on Sept. 21st, and Peace One Day, a non-profit that supports the annual day of global ceasefire and non-violence."

No comment yet from McDonald's.


• In Minnesota, the Star Tribune reports that the US Securities and Exchange Commission (SEC) has "decided not to penalize Target Corp. for the 2013 cyberattack that led to the exposure of millions of customers’ data."

While the SEC decision removes one area of concern for Target, the story says, "the company continues to be under investigation from state attorneys general and private litigators over the episode and may face costs from penalties or settlements tied to them."


• It is being reported in the media that the Great Atlantic & Pacific Tea Co. (A&P) has filed layoff notices for more than nine thousand of its employees in New Jersey as part of its bankruptcy proceedings and planned sale of the company's stores.

While some of the layoff notices list September 19 as the effective date, the majority of them list November 26 - Thanksgiving Day.

At the same time, the Wall Street Journal reports that the bankruptcy judge overseeing A&P's affairs said the retailer "could sell pharmacy assets at 12 of its in-store pharmacies to Rite Aid Corp. for $8.1 million."


• Kroger announced that "associates working at stores in Kroger's Columbus division have ratified a new labor agreement with UFCW Local 1059 ... The contract covers more than 12,000 associates working in 85 stores, 64 fuel centers and 83 pharmacies in the Columbus metro area and suburbs and region."

"This new contract provides wage increases, affordable health care and ongoing investment in our associates' pension fund to support their retirement," said Joe Grieshaber, president of Kroger's Columbus division.

Published on: August 26, 2015

Regarding Haggen's ongoing troubles, one MNB user wrote:

Everybody seems to be blaming everyone for this apparent failure of this  company. They mention Albertsons, Haggen, Vons etc but no one is at all mentioning the FTC where in my opinion all the blame should be. I thought they were to protect and preserve fair trade so had could they or anyone else think a company can go from 14 stores on Friday to 160 on Sunday and be competitive but yet they allowed the sale to happen. Also Haggen is saying they will close 26 stores well if these 26 stores were sold because of competitive reasons where is the business of the 26 stores going to go when these stores close yet no one is talking that the stores must go to operators to maintain a competitive environment. The biggest failure here is the FTC for not doing their job. Just my opinion.

It is a fair point ... and federal regulators didn't just allow the sale to go through, but also insisted that the conversions take place in such short order that it was almost impossible for Haggen to do it effectively. I've made this point repeatedly ... though I don't think it takes Haggen's ownership off the hook.





We had a piece the other day about how Kellogg's is embracing the opportunities offered to it by Amazon, which led MNB reader Paul Schlossberg to write:

Agree 100% with having to understand how to deal with a huge company (Amazon). For this manufacturer, and many others, volume through Amazon is growing very fast. At this point it represents a small share of total sales. That reminds me of similar discussions not long ago...the retail brand being talked then about was Walmart. 

The real challenge for brands is the slow growth economy. If sales for my food products increase at one retail brand, I need to know if it was truly incremental volume or whether it was simply cannibalized from another retailer. 

Add to that changing consumer shopping habits. If more people want to shop online (for many very good reasons), then not being available through e-tailers will be bad for my food brand.

How much money (promotional dollars, sales management time, etc.) was spent to simply wind up the year with a minimal sales increase? Was the result was a shuffling of the same sales volume among the various retail and e-tail customers? Is anyone out there actively tracking and managing profitability by customer?




Responding to yesterday's piece about the Starbucks CEO sent a memo to baristas suggesting that they be extra nice to customers who may be frazzled by the volatile stock market, MNB user David A. Cohen wrote:

Although not the cheapest cup of coffee, they consistently provide a great product with a unique and friendly staff. I think the email to his employees was a mark of great leadership and goes a long way in solidifying Starbucks as part of a community in which they sell products.  
 
Gotta go and get a medium dark roast! Note that I have not bought into their sizing rules. Starbucks may want to put effort into capturing some blue collar sales. Maybe a campaign letting the DD consumer know that it is ok to drink finer coffee. Not sure how I would approach this, but I will consider it over my next cup.





In writing yesterday about the hiring of Ryan LaRoche, currently head chef at the Blue Duck Tavern in Washington, DC, to be Executive Chef and Vice President of Culinary for Mariano's, I commented:
Never been to the Blue Duck Tavern, but I've heard Tony Kornheiser rave about it numerous times on his radio show. Being a loyal Little, that's good enough for me ... it persuades me that Mariano's has made someone who really understands food culture.

Which led MNB reader Adam Miller to write:

As a fellow loyal Little…a TK Salute to you! I knew I liked you.




On another subject, how Unilever has allowed Ben & Jerry's to continue its socially progressive ways even after acquiring the brand, MNB reader Daniel Hogan wrote:

I was reading an article yesterday that mentioned the “Behind The Brands” campaign which measures the sustainability efforts in multiple facets of the top 10 food and beverage companies worldwide. Unilever has consistently held second place behind Nestle but this year took the number one spot. Unilever also received a 50/70, the highest score any company has received since this began ... This really shows how tremendously Ben & Jerry’s has impacted the whole of Unilever.

Agreed.

Hogan also had a question about something else I wrote yesterday -  in commenting about a story about growing pet need sales, I commented:

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.

To which Hogan ... obviously a relatively new MNB reader ... responded:

Is that for Jimmy or Warren? And why Parker?

Jimmy. And Parker is named after mystery novelist Robert B. Parker. (Longtime MNB readers know that I probably quote Jimmy Buffett and Robert B. Parker more than anyone else...)