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    Published on: September 10, 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.

    The broad focus on MNB is consumers and retailing, so it would be some sort of punditry malpractice if I didn't write about change and innovation pretty much every day.

    I've been thinking a lot about change this week, in the wake of Tuesday's story about Bfresh, the new small store opened last week by Ahold's new Fresh Formats division. As impressed as I was by the store and the story it tells, I may have been more impressed by the fact that Ahold was willing to create this new division and not saddle it with all the various infrastructure and institutional anchors that big companies often put on their various divisions. Bfresh isn't just a terrific store with a terrific story, but it also reflects a fresh corporate approach to growth and innovation.

    I think that's what companies need to do these days if they're going to succeed ... not just loosen the leash, but give their people real and actionable autonomy to try new things, to take risks, to make mistakes, and to find new paths as they work to create consumer connections.

    One of the reasons that retailers have to do this is that it is exactly what is happening, in the larger context, in so many other places in our culture.

    One of the reasons I was so intrigued by Bfresh is the idea that while it is in an urban Boston neighborhood right now, the next iteration will be in suburban Fairfield, Connecticut, which is pretty much just up the road from me. It has been well documented that many people around the US are moving back to its cities ... it isn't just millennials who find that cities more attractive and relevant to how they want to live their lives, but even aging Baby Boomers, who are selling their homes and moving to the city because...well, because they think that cities are more attractive and relevant to how they want to live their lives.

    That's one of the reasons that architects and planners in suburbs like the one where I live are looking for ways to create near-urban retail and residential centers in the heart of suburban towns ... they want to keep Baby Boomers from leaving and get Millennials to move in. I find this to be enormously interesting and attractive ... and I think it has the potential for reshaping the nation's landscape.

    This kind of fundamental rethinking is happening everywhere. I look around my kitchen, and I wonder how it will change in just a few years. I'm old enough to remember when buying a microwave was a big deal, but it is a pretty safe bet that we're at the edge of major technological innovations that will create the "smart kitchen," with new influences on how we cook, shop, replenish, and eat.

    It will be the retailers that try to figure out all this stuff now ... getting ahead of the curve ... that are most likely to have sustainable business models.

    Not that long ago, I was in Manhattan and needed to get out to Citi Field in Queens ... and so I took the number seven subway. And all I could think about as I rode that thing is how much it seemed like early 20th century technology ... the cars were aging, the ride kind of rickety, and it could've as easily been 1945 and 2015, if it weren't for all the people on their iPhones. And I found myself wondering if anyone in the state or city government is working on designing a 22nd century public transportation system that will replace it. Because it will need to be replaced, not just patched up. And the time to start thinking about this stuff is now.

    A 22nd Century system, you may ask ... aren't you getting a little ahead of yourself?

    I don't think so. The 22nd century is only 85 years away ... and if we've learned anything in the past decade, those years go by in the blink of an eye.

    In a lot of ways, progressive retailers need to start thinking about they'll be different in 85 years. Sure, it's early ... but I'd be willing to bet that Jeff Bezos is thinking about it.

    From the Bfresh store in Boston to the New York subway system, lessons abound about how and why to embrace the future. We might as well ... because we can't fight it.

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

    KC's View:

    Published on: September 10, 2015

    by Kevin Coupe

    MarketWatch reports that " Inc. has discontinued sales of its so-called Fire Phone. The Seattle-based online retailing giant has depleted its inventory and has no plans to offer more of the smartphone," though the company will support customers who actually bought the thing.

    Here's the bet I'd make. First of all, in all likelihood, the people behind the Fire Phone did not suffer the slings and arrows of corporate disgrace because of its failure. At Amazon, that doesn't seem to be the way things work. Rather, they all learned something important, learning that will be factored into new pieces of hardware that it will introduce in the future. (Like the $50 Kindle tablet computer it announced this week.)

    Ecosystems aren't created without some failures. As long as the people and the company learn from them, that's okay.

    Second, I'd bet that this won't be the end of Amazon's interest in the smart phone business.

    Amazon's next foray, I'd bet, will be an Eye-Opener.
    KC's View:

    Published on: September 10, 2015

    The Orange County Register has a piece about the Haggen bankruptcy in which MNB fave Burt Flickinger, managing director of Strategic Resource Group, is quoted as calling it "the fastest (failure) in modern supermarket history. In all of retail, I haven’t seen anything like this.”

    Haggen filed for Chapter 11 bankruptcy protection this week, hoping to use it "to reorganize around its core profitable stores" and "market for sale some locations in the five states it operates and to explore market interest for various store locations. It was just the latest twist and turn in a story that began with an 18-store company that had competitive issues in its home Pacific Northwest markets, and then, fueled by investment funding, decided that it made sense to acquire 146 stores that were available after the Albertsons acquisition of Safeway. Regulators pushed Haggen to convert the stores in short order, which meant that other than signage and relatively few merchandising adjustments, the conversions ended up being less consequential than necessary to create any sort of competitive advantage.

    Flickinger goes on to say that "in Washington state where Haggen had been successful, people are willing to pay more, but in rough and tumble Southern California and Nevada – where price is the No. 1 motivator – Haggen didn’t do sufficient homework."

    He also says that it is possible for Haggen to survive and continue to have a presence in Southern California, albeit as a smaller entity, in part because the company "has retained veteran store managers from Vons and Albertsons, whose experience can be a 'real plus'."

    “Despite its transitional challenges, Haggen can make a comeback,” Flickinger says ... though he also notes that life will only become more challenging when Aldi enters the market next year with 45 locations.

    “Aldi is a competitive nightmare,” he says.
    KC's View:
    I almost never disagree with Burt Flickinger, because I understand that one does so at one's own risk. But I have to admit that I think calling Haggen's current situation "transitional challenges" is a feat of understatement ...

    The company's problems could be exacerbated not just by Aldi, but also by the fact that some of those store managers almost certainly are looking for jobs elsewhere ... so they may not be around to help bail the company out.

    Furthermore, there are a lot of decisions to be made in fairly short order. For example, with the departure of Bill Shaner as CEO of the company's Pacific Southwest division, it means that John Clougher will be running the company from Washington State ... and does that mean that it will lose even the marginal sense of local markets that it has had?

    I'm not persuaded that Haggen will do anything other than sell off everything it can (look to Stater Bros. as a potential site buyer), close the stuff it can't, and retreat back to the Pacific Northwest with its tail between its legs, hoping that it can just survive there.

    Published on: September 10, 2015

    Whole Foods said yesterday that its one-year-old partnership with Instacart, which provides grocery delivery services to its shoppers, has generated the sale of 2.2 million bananas, 1.25 million apples, four million cage free eggs, and 500,000 avocados, with the most frequently purchased items "bananas, avocados, carrots, lemons and limes."

    Whole Foods and Instacart also estimate that the deal saved a total of 970,000 hours for consumers "to spend however they liked because we did the shopping for them."

    “The results speak for themselves," said Walter Robb, co-CEO of Whole Foods Market, in a prepared statement.
    KC's View:
    I have to admit that Instacart has worked for some retailers better than I expected, but I continue to believe that in the long run, the company is positioning itself for a sale that will take advantage of its high valuation. That won't necessarily be bad for retailers with which it is doing business, but I also think that in the long run, they have to think about the alliances they make and the long-term impact on shoppers.

    Published on: September 10, 2015

    The Los Angeles Times reports on a new study from Rand Corp. suggesting that public policy moves to eliminate food deserts - areas "devoid of fresh, healthy food" - have only a marginal impact. The new research, according to the story, "indicates that the picture is much more complicated, with food choices being affected by several factors, including the cost of food, cultural preferences and marketing."

    The story says that the study "found virtually no link between the type of food and drinks that Los Angeles County adults consume and the proximity of fast-food outlets, grocery stores and convenience stores to their homes."

    The Times notes that "the research was limited. It looked only at a few variables — such as fruit and vegetable intake and soda consumption — and at study subjects' proximity to stores. It did not factor in the types of food those stores offered or food options people might have in other parts of their lives, such as work." And the Times also notes that "other experts say that the findings aren't necessarily surprising because it's hard to pinpoint a single cause of bad eating habits. However, they maintain that the food environment can affect what people eat and that healthy and convenient choices are vital to improving public health."
    KC's View:
    Choices are better than none. Though, to be fair, these things take time ... sometimes generations ... to have a real impact. I'd hate to see is dismiss idea that food deserts need to be eliminated just because the short-term evidence is that it doesn't have enormous impact.

    Published on: September 10, 2015

    Reuters reports that Kmart has decided to make its layaway program more attractive to consumers by eliminating its requirement for a down payment for any products placed on layaway between now and the end of November.

    The program launched last week.

    According to the story, "That represents an expansion on its layaway scheme last holiday season, when it limited the no-money-down option to certain weeks, said Jai Holtz, president of financial services at Sears.

    "Kmart is also allowing customers to tap its rent-to-own program without a down payment - a first since the scheme for big ticket items like refrigerators and TVs was launched in 2013. That option will also run through the end of November."

    Walmart also looked to ramp up its layaway program appeal by launching it on August 28, two weeks earlier than last year.
    KC's View:

    Published on: September 10, 2015

    The Associated Press reports that a Texas woman "has become the second person to die in a nationwide salmonella outbreak linked to tainted cucumbers ... The U.S. Centers for Disease Control and Prevention reported Wednesday that there have been 341 reported cases of salmonella in 30 states since July 3. Seventy people have been hospitalized."

    According to the story, the Texas woman had other serious health issues, and salmonella was listed as a "contributing factor." The first person who died was a 99-year-old San Diego woman.

    The story goes on to say that "health officials in several states have found strains of salmonella in cucumbers grown in Mexico and distributed by Andrew & Williamson Fresh Produce of San Diego. The company has recalled its 'Limited Edition' brand cucumbers and has said the health and safety of its customers are its highest priority."
    KC's View:

    Published on: September 10, 2015

    Consumer insights firm iModerate is out with what it calls "a new qualitative study" into "what spurs dads to make impulse purchases, what types of unplanned items they buy when they’re alone versus with their kids, and the emotional drivers behind these purchases."

    According to the report, dads respond to price (51 percent said "they often can't pass up a great deal"); a craving (19 percent); rewards (16 percent said they "pick up items for their children or entire families to compensate them for good behavior); convenience (seven percent said they buy things to avoid other shopping trips); as a treat for families (six percent); and brand loyalty (two percent).

    In addition, the report says that when dads are alone, they "tend to impulsively buy items such as ice cream, chips, jerky, beer or a tool they need," but that when they're with their kids, "they’re less inclined to buy beer or tools, and more likely to opt for toys, DVDs, clothes and video games."
    KC's View:
    I see no problem with any of these results, and certainly think they are actionable if retailers want to generate more impulse purchases. But I also wonder how they would have been different if they'd surveyed mothers.

    Published on: September 10, 2015

    The Wall Street Journal reports that "the Federal Trade Commission is stepping up its probe of Staples Inc. ’s takeover of rival Office Depot Inc., seeking sworn legal declarations that could be used if antitrust enforcers decide to challenge the deal, according to people contacted by the agency." The probe is seen as a "signal the FTC is gearing up for a possible lawsuit against the deal, which was valued at $6.3 billion when it was announced in February."

    Here's the interesting part, according to the Journal: "The questions are less about the retail market for pens and school backpacks than the business of supplying corporate and government clients that buy vast quantities under contract and where there are few other major competitors. Some of the FTC’s most probing questions focus on the chains’ business with those customers, according to several people contacted by the agency."
    KC's View:
    Fascinating ... especially because I always sort of figured that one of the reasons government budgets are so high is that they don't shop at Staples or Office Depot.

    Maybe they should try Amazon.

    Published on: September 10, 2015

    "It’s almost impossible to dispute that sugar plays a prominent and very damaging role in cases like that one, and in the health of most Western nations," The New Yorker writes. "What’s less certain is how directly, or to what extent, it is to blame."

    And that's the basic premise behind a new story that includes an assessment of a new documentary, That Sugar Film, described as a sometimes contrived yet compelling look at "what our sugar addiction does to our bodies."

    You can read The New Yorker piece here.
    KC's View:

    Published on: September 10, 2015

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

    • The Chicago Tribune reports that "a long-stalled proposal" in Chicago that would add a penny-per-ounce tax on soft drinks and other sugary drinks "failed to gain traction amid a strong lobbying pushback and a lack of support from a mayor who is pursuing his own series of tax hikes ... Chicago already has a 3 percent tax on retail sales of soft drinks in cans or bottles and a 9 percent tax on the wholesale price of the syrup for fountain drinks."

    Had the proposal become law, "the tax would apply to drinks with at least 5 grams of sugar per 12 ounces. A two-liter bottle of pop would go up by about 68 cents, a six-pack of 12-ounce cans would see a 72-cent increase and a 24-can case of soda a $2.88 bump."

    • On National Public Radio's The Salt, it is reported that McDonald's is saying that "in the near future, it will no longer buy eggs from chickens that live in cages ... The maker of Egg McMuffins announced that within 10 years, all of its American and Canadian egg suppliers will be cage-free. And it may need more of those Egg McMuffins: The company recently announced plans to serve breakfast all day long."

    On an annual basis, the company says, "McDonald's USA purchases approximately two billion eggs and McDonald's Canada purchases 120 million eggs to serve on its breakfast menus, which includes popular breakfast sandwiches, such as the Egg McMuffin and Egg White Delight. Since 2011, McDonald's USA has been purchasing more than 13 million cage-free eggs annually."

    The company said in its statement that animal welfare is a top priority for the company. I'd prefer that McDonald's think more about human welfare and make a better hamburger...

    • Flowers Foods yesterday announced that it has reached an agreement to acquire Alpine Valley Bread, a manufacturer of certified organic breads, for $120 million in cash and stock. The purchase is subject to regulatory approvals, but is expected to close before the end of the year.
    KC's View:

    Published on: September 10, 2015

    • Northern California-based Andronico's Community Markets announced yesterday that it has hired a new CFO - Cheryl Hughes, most recently controller for Chemoil and a former financial executive for Pacific Convenience & Fuels and Circle K Stores.

    • The Seattle Times reports that Amazon has announced the hiring of Christine Bader, who formerly "worked with U.N. Special Representative John Ruggie to develop the U.N. Guiding Principles on business and human rights," and also "worked for nearly a decade at BP on social issues, including human rights," to be its new director of corporate social responsibility.

    • MillerCoors announced that Gavin Hattersley, who has been interim CEO since last July, is removing the "interim" from his job title. Hattersley has been in the job since the retirement of CEO Tom Long last June.
    KC's View:

    Published on: September 10, 2015

    ...will return.
    KC's View: