retail news in context, analysis with attitude

Published on: September 11, 2015

by Kevin Coupe

The Seattle Times reports that "Starbucks is bringing mobile ordering and pay to Android users sometime in September, and also plans to roll out the feature across the U.S. to stores it operates by the end of this month, Chief Financial Officer Scott Maw said Thursday.

The announcement means Starbucks is speeding up implementation of the feature ... The mobile ordering and pay feature was pioneered in Portland last December, then released in hundreds of stores across the Pacific Northwest. In June it began to be extended across several more states.

"The feature has been available only on Apple devices."

I've references this before on MNB, but I think it is worth repeating.

I think the Starbucks mobile ordering app is a game changer, with the ability to fundamentally change consumer behavior.

When I've lived in Portland, Oregon, the past few summers, I've always gone out of my way to patronize local coffee shops. At home in Connecticut, I drink Starbucks, but when in Portland, I like to try different things. There is great quality and variety everywhere.

Not this year, though. Because there was a Starbucks around the corner from my apartment, it meant I could hit a couple of buttons, walk out the door and find my coffee sitting on the counter, all paid for , when I got there.

Huge convenience. It changed my behavior, and made me believe that this is the kind of killer app that more retailers have to seek.

I'm really glad that they're expanding it nationwide.

Because, it makes my life easier, and in the end, this really is all about me.

Published on: September 11, 2015

The Bergen Record reports that as the Great Atlantic & Pacific Tea Co. (A&P) goes to court looking for permission to essentially void union contracts so it can go forward with plans to sell all of its stores and cease operations, it is getting attention that the company set up a $6 million trust fund - designed to provide continued compensation to senior executives - three-and-a-half months before filing for bankruptcy.

The Record writes that "the creation of the trust fund suggests the company was aware it was preparing for bankruptcy, and that can raise other questions, 'namely what other decisions did they make during this time period right when they knew they were headed towards bankruptcy,' said Stephen Lubben, a professor at Seton Hall University’s School of Law and the Harvey Washington Wiley Chair in Corporate Governance and Business Ethics."

The story goes on: "A&P’s 'key employee retention plan' or KERP, will the subject of a hearing before U.S. Bankruptcy Court Judge Robert Drain Friday. The unions representing store employees, and a federal bankruptcy trustee, have filed objections to A&P’s original plan, which would have distributed up to $5 million to 495 employees. A&P on Wednesday reduced its request to up to $3.9 million for 468 employees.

"That retention plan is separate from the trust fund set up for the company’s top management team. The Great Atlantic & Pacific Tea Company (A&P) has declined to identify the executives receiving trust payments."

The Record writes that "A&P, in financial statements accompanying its bankruptcy filing, outlined a total of more than $13 million in payments to company directors and executives during the 12 months prior to the bankruptcy filing, including monthly consulting fees to one director ranging from $100,000 to $175,000, as well as monthly car allowances averaging $700 for several officers, monthly cellphone allowances, expense account reimbursements of as high as $7,161, and bonus payments to two executives, one for $400,000 and the second in the amount of $100,000."

Published on: September 11, 2015

The Oregonian reports that Haggen has been granted the right "to borrow up to $215 million to continue operating" while it moves through Chapter 11 bankruptcy proceedings.

According to the story, "Documents filed in the U.S. District bankruptcy court in Delaware on Thursday show that the court will allow Haggen to borrow money in a debtor-in-possession financing plan led by lender PNC Bank. The grocer will be able to use the money to operate its 164 stores (27 of which are slated to close within the next month) through the date of a bankruptcy hearing, which is scheduled for October 5."

The story notes that Haggen owes its creditors more than $55 million, having unsuccessfully tried to grow from an 18-store company based in the Pacific Northwest to more than 160 stores, with units in California, Arizona and Nevada - fueled by investment funds and the availability of stores that had to be divested when Albertsons acquired Safeway. This effort has largely turned into a debacle, as the company was unable to gain any sort of competitive traction, hampered by pricing issues, little differentiation, and resultant supply chain and cash flow problems.

Meanwhile, the Bellingham herald reports that the United Food and Commercial Workers (UFCW) is pledging to "fight to keep its contract as the company reorganizes ... In a letter sent to Haggen employees Wednesday night, Sept. 9, UFCW 21 President Todd Crosby said the union is coordinating efforts for all the local chapters up and down the West Coast in order to have a focused response and keeping a united front."

The story goes on to say that "while it is unclear at this early stage how much influence the union will have on Haggen’s reorganization plans, it does represent a majority of Haggen’s current workforce. According to court documents, about 80 percent — or around 8,770 employees — are union members ... Courts have allowed companies to cancel bargaining agreements with unions, but usually only under certain circumstances, according to coursework document from the National Paralegal College. Those circumstances include the company proposing modifications to help alleviate the need for bankruptcy and the company acting in good faith with the union."

Crosby clearly questions whether that "good faith" bar has been met. In his letter to employees, he wrote that "it is simply wrong for all of our hard-working Haggen employees to have learned about this bankruptcy filing on the local news."

As these events were playing out, Haggen issued an amended statement regarding the departure of Bill Shaner, who was CEO of the company's Pacific Southwest stores. The original statement was terse, to say the least:

"Bill Shaner is no longer with Haggen. We greatly appreciate his contribution to the company. John Clougher will be leading the company going forward."

Yesterday's revised statement was less so:

"Given the need to sell and close a significant number of Haggen stores and reduce operating costs with the filing of Chapter 11, the decision was made to consolidate the Haggen Pacific Northwest and Southwest operations into one organization with its primary headquarters in Bellingham, Washington. As a result, Bill Shaner, CEO of the Haggen Pacific Southwest, has left the company. Haggen greatly appreciates Bill's contribution to the company."

Published on: September 11, 2015

The New York Times reports that the federal government has released two of the final rules that will be implemented as part of the bipartisan Food Safety and Modernization Act (FSMA), which was passed five years ago and only now is becoming part of the nation's operational food safety fabric.

From the Times coverage:

• "The new rules are related to the processing of foods like peanut butter and ice cream. A separate rule on fresh produce is not expected to become final until later this year. Today, nearly half of fresh fruits and one-fifth of vegetables in the United States are imported, a relatively recent shift that has created new difficulties for monitoring food safety. The new rules require food manufacturers to put in place written food safety plans that detail points in the manufacturing process that could be risky and steps they are taking to minimize that risk."

• "Under the rules, food makers will be required to keep written records, effectively a sort of safety activity log for the production center, and F.D.A. inspectors will have the right to review them. That is a big change. Before, plants were not required to hand over records to inspectors, said David Plunkett, a senior staff lawyer at the Center for Science in the Public Interest’s food safety program. In 2007, an operator at a Peter Pan peanut butter factory refused to hand over records to an F.D.A. inspector, and some months later, around 600 people fell ill from its products, he said."

• "The F.D.A. will have far greater enforcement powers, too. Before the law, F.D.A. officials inspected plants only about once every 10 years ... The law bumped that up to at least once every five years for high-risk plants and, starting early next year, to once every three years. The F.D.A. also will have the authority to close a facility when plans are inadequate. Previously, the agency had to wait until people became sick."

The Times notes that funding for the Food and Drug Administration (FDA) remains an issue: "The Obama administration has asked for $109.5 million in additional funding for fiscal 2016, but the House and Senate funding bills would provide less than half that."

In a prepared statement, FMI Vice President of Food Safety Programs Hilary Thesmar said, “We commend the agency for its commitment to transparency, guidance and education throughout the rulemaking process. FSMA represents the most sweeping change to our food safety laws in over in 70 years, and we will continue to work with FDA to analyze the rules and assess implications for the grocery industry.”

Published on: September 11, 2015

Kroger announced yesterday that Mike Donnelly has been named EVP of merchandising, Chris Hjelm has been named EVP and CIO; Fred Morganthall has been named EVP of retail operations; and Mike Schlotman has been named EVP and CFO.

According to the announcement, "Each leader has been assigned additional responsibilities to streamline decision making under this new organizational structure."

Kroger also announced "the retirement of senior vice president of retail divisions Geoff Covert, and the promotion of Sukanya Madlinger as his successor. Mrs. Madlinger currently serves as the president of Kroger's Cincinnati/Dayton division. She will be succeeded by Tim Brown, who currently serves as president of Kroger's Delta division, based in Memphis. Mr. Brown's successor will be named at a later date."

"Kroger is fortunate to have an exceptionally strong group of leaders across our company," said Rodney McMullen, Kroger chairman/CEO, adding, "This new organizational structure will help Kroger achieve laser-focus to accelerate growth, improve our connection with customers and deliver value for shareholders."

Published on: September 11, 2015

• Reuters reports that Walmart said yesterday that it has discovered "a 'material weakness' in its controls over accounting for leases, which allowed for misapplication of accounting standards related to sale-leaseback transactions.

"In a quarterly regulatory filing on Wednesday, the company said it did not have sufficient controls in place to 'properly identify and account for leases that were subject to the sale-leaseback accounting guidance' ... The company said it was revising its existing controls and procedures to properly apply sale-leaseback accounting, and the remediation is expected to be completed in the year ending January."

Published on: September 11, 2015

• The Associated Press reports that "Mondelez, the company behind the Oreo and Cadbury brands, says that it plans to have 50 percent of its portfolio contain healthy snacks within the next five years. Healthy snacks currently comprise more than a third of its total revenue, according to Executive Vice President and Chief Growth Officer Mark Clouse ... Clouse said Thursday that Mondelez International Inc. is looking to simplify ingredients and nutritional information for its products as it develops new goods to meet consumer demand for healthier items. The executive said that the company expects to focus 70 percent of new product development efforts on healthy goods over the next five years."


• The New York Times reports that Ronald Boire, the new CEO of Barnes & Noble, says that he believes he can solve the company's continuing troubles and generate positive financial results, and that he sees "toys, games and other merchandise as an integral piece of the company’s business and added that he aimed to transform the stores into even more attractive destinations and community hubs."

However, he also said that "he saw opportunities to increase foot traffic to stores with special events and to increase sales by integrating its stores, website and Nook device content to give the company a 'strong omni-channel presence'." The problem is that the Nook continues to be a trouble spot - it "has continued to show steep declines as consumers rely on smartphones and turn to more popular devices from Amazon and Apple. Revenue at the Nook segment fell 22.4 percent to $54 million, and digital content sales fell 28 percent."


• In New Orleans, the Times Picayune reports that Rouses Markets has hired "a full-time dietician for a new 'Eat Right with Rouses' initiative. In a press release, managing partner Donny Rouse said registered dietician Esther Ellis will pick healthy foods to be marked on the supermarkets' shelves and included in advertising ... Ellis will oversee health screenings at stores, shopping tours and nutrition classes. She will also develop nutritional breakdowns for the supermarkets' prepared foods, Rouses branded foods and recipes."


• The Wall Street Journal reports that California Gov. Jerry Brown vetoed a bill late Wednesday that would have effectively banned drone flights over private property without permission, a major victory for companies such as Google and Amazon.com that want to use the devices to deliver small packages.

"Gov. Brown said in a letter late Wednesday that while 'drone technology certainly raises novel issues that merit careful examination,' the bill would have exposed drone users 'to burdensome litigation and new causes of action'."

Published on: September 11, 2015

The Wall Street Journal has a terrific piece about the competitive tumult that as roiled the UK supermarket industry, as discounters like Aldi and Lidl totally disrupt the status quo.

"Similar challenges are washing up on U.S. shores," the Journal writes. " A&P, America’s first traditional supermarket chain, with roots dating back to 1859, said in July that it would close or sell its remaining stores as part of its bankruptcy filing. The moves come after years of it being squeezed by an array of new competitors, such as Whole Foods Stores Inc. on the high-end to cheaper alternatives like Wal-Mart and Aldi.

"Seeking scale in the U.S. and Europe, Dutch grocery giant Royal Ahold NV and Belgian rival Delhaize Group agreed in June to merge in a deal that will create a $29 billion titan—combining American chains like Food Lion and Stop & Shop."

And now, Aldi is expanding in the US and Lidl is coming ... which means that there will be significantly more competition, and probably more fallout.

You can read the entire story here.

Published on: September 11, 2015

We continue to get comments about Haggen...

One MNB user wrote:

I was hopeful your “fave”, Burt Flickinger would have at least given you pause to perhaps consider another POV…Or perhaps Burt is correct as I believe.

Your statement about Clougher running the company from Washington State…boarders on ridiculous. Does Kroger have a CEO in all their regions? Last I knew, Haggen still had a regional office in SoCal with qualified people who do have a sense of the local market….Last I made the trip, Seattle to SoCal didn’t require much more than a health sports section.

I agree with Mr. Flickinger that “Aldi is a competitive nightmare”, but also a fair statement that Haggen’s number 1 target is not the Aldi shopper.

One last point of clarification. While Haggen clearly had/has challenges in the North, and many challenges ahead, with their downsizing to the legacy 18, those 18 are doing quite well and should not be confused with their acquisition stores.

Love your opinions, but happy to read Burt’s voice of reason.

Another MNB reader wrote:

I am what I like to call a Haggen Hostage and I wanted to a moment to thank you for your views on this horrible life changing catastrophe.

December 18, 2014 I was a happy top rated store director with almost 30 years at Safeway just minding my own 'business' when bam I got hit with the news I was sold with my store like chattel. I had no choice but, to try to make the best of it or find another job. My team is a strong team one of the best and so we stayed together. My store had a great volume and great profits before the Haggen takeover and they came in so arrogant refusing to listen to employees and customers. They had promised us before we opened the employees were vital to their success and they would always be put first. They lied. We opened then less then 90 days we were informed we are now closing. That is after 21 laid off employees three weeks prior.

Now my employees are left to uncertain future no guarantees of seniority, benefits, or retirement. Most are stellar senior employees with up to 34 years with Safeway. No one told them this could happen. I believe someone needs to fix this and make it right, but the truth must get out there. So if anything I believe your views are gentle and make Haggen and the whole situation not as bad as it truly is. Granted it is not all their fault a lot lies with the FTC and the union, but Haggen bears the most weight. You have had the most candor and I appreciate that I share them with all my fellow store directors and employees.

I hate to say it, but it just seems likely to me that you and your employees are screwed. (I'd use another word, but this is a family website...)

From another reader:

As a customer, I've just about had it with Haggen.  I've had too many issues of deficient food from the store-the majority of produce I've bought has had something wrong with it-moldy cherries, moldy tangerines, numerous black spots in artichokes, mushy melons.  I've had several instances of refrozen ice cream.  One steak had off odor.

The store just doesn't do enough volume to keep stuff fresh.  And I have doubts the produce supplier is really supplying first rate stuff (nothing I've bought there has been a cut above!).  It just doesn't seem competitive with other mainstream stores, let alone premium stores.

Anyway I don't have a lot of hope for them.  Wondering if Stater is interested in some locations?  Will be interesting to see what happens to the stores.

And another:

Can Haggen be successful in the Pacific Southwest?  Based on the constant barrage of negative press, the answer is in doubt. It has been reported that Haggen was “forced” to convert the new stores too quickly, and that actions taken by the company and its “partners” have led to the negative perception of the company.  For whatever reason, before going live, Haggen failed to build a positive brand image, awareness and strategy to deliver on their go-to-market promise of “Southwest Fresh and Local.”  As a result, Haggen now faces the far more difficult task of focusing on addressing its growing negative image, rather than improving its business. There are some positive steps that Haggen could be taking to ensure that they will be successful  in the future. Hopefully, it is not too late.

Alas, I fear it is.

And still another:

I can give you two examples why I do not shop at our local Haggen store.  After the takeover their Black Velvet Canadian whiskey was priced at 19.99$, regular retail price. Albertson price before the change was 13.99$, sometimes lower when it went on sale.  I checked the store recently and the price was the same except if you purchased 4, the price was reduced 10%.  I also buy mix, either 7-up or ginger ale.  The large bottle at Haggen is 1.99$ on sale for 1.69$.  At Stater Bros. nearby they sell the same bottles of mix for 69 cents if you buy four. Their price for Black Velvet is 12.99$ on sale for 11.99$ I have other examples as well as my neighbors do, which is why very few are shopping at Haggen.  I have used this example in an email to Haggen.  They did not respond and the prices have not changed as far as I know but I haven’t been there in awhile.

Published on: September 11, 2015

Last night marked the beginning of the National Football League season, as
the New England Patriots defeated the Pittsburgh Steelers 28-21.

Published on: September 11, 2015

About a year ago, I committed a kind of heresy when I wrote about Reed Farrel Coleman's "The Blind Spot," saying that "it may be the best Jesse Stone novel yet. And that includes the nine books in the series written by its creator, Robert B. Parker."

Coleman, for the uninitiated, has been hired by the Parker estate to continue the Jesse Stone series in the same way that Ace Atkins is now writing the Spenser novels, using characters created by Parker, who passed away in January 2010.

This week, Coleman is out with another Stone novel - "The Devil Wins," and again, he does not disappoint, as he continues to explore the flawed, heavy-drinking, justice-obsessed Stone with surgeon-like precision and a masterful use of language.

One of the things that separates Coleman from Atkins is the same thing that separates the Stone novels from the Spenser series. The Spenser novels are written in the first person, and so the narration has to be in a voice that sounds like that created by Parker. Atkins isn't at all imitative, but he realizes he's playing music that is well known to the audience, and so he knows there are beats he has to hit if the character is to be credible to those of us who have been reading Spenser novels for decades. It speaks to Atkins' skill that he's been able to capture the voice and the themes and still maintain a high level of originality.

Coleman, on the other hand, has more freedom - he's writing in the third person, so he can bring a different kind of observational skill to the proceedings while never being dispassionate about his protagonist. In a lot of ways, he's more critical of Stone's flaws and more willing to examine them than Parker was; he also has an entirely different writing style, going way beyond the minimalism that characterized Parker's work, especially as he got older.

But it works. Brilliantly. "The Devil Wins" actually has a mystery at its core, and crimes for Stone to resolve. (Parker famously once said that very few of his books were "about who stole the Maltese Falcon," but rather, essentially, about the necessity and intangibility of love, written about within the framework of a hardboiled American detective novel.) As he does so, in the north Massachusetts shore town of Paradise, Coleman's writing reminds me of the work of Ross Macdonald, who would explore how the sins of the past would be visited upon younger generations, creating inevitable and unavoidable consequences.

"The Devil Wins," by Reed Farrel Coleman, is a terrific piece of work. Read it.

Two tangential notes...

• Tom Selleck, who produced and starred in a series of highly rated Jesse Stone movies for CBS, brings the character back to the Hallmark Channel in the first of two new movies, Jesse Stone: Lost In Paradise, on October 18.

• Coleman, who was acclaimed for his Moe Prager series before he started writing the Jesse stone books, will launch a new series of original mysteries about a retired cop named Gus Murphy, with "Where It Hurts," due out next January.

I can't wait.




While I was off last week, I had a chance to catch a bunch of movies ... one of which I loved, most of which I found to be flawed, and one that was an utter disappointment.

The one I loved was Ex Machina, a nifty futuristic thriller about artificial intelligence. Domhnall Gleason plays a young computer coding expert who wins a company lottery and is flown to the isolated retreat owned by his boss, Oscar Isaac, where he is asked to spend a week evaluating the artificial intelligence of a robot created in the image of a beautiful woman, played by Alicia Vikander.

But from the moment he arrives, nothing is quite what he expects it to be, and it is possible that nothing is what it seems ... and his task escalates into a full-scale struggle that is part man vs. machine, and part battle of the sexes. This is my kind of science fiction - thoughtful, provocative, with hardly a wrong move or a gratuitous scene. The performances are uniformly excellent, and the writing and direction by Alex Garland is outstanding. Put me down as an enormous fan of all of the above, already looking forward to the next movie that Garland makes.


Mad Max: Fury Road is a continuation of the iconic series of films that George Miller made decades ago, with Mel Gibson as Max, trying to survive a violent post-apocalyptic world while traversing a desolate landscape. Tom Hardy takes over as Max in this new film, in which Miller seems to be indulging his desire for over-the-top action by using effects and techniques that didn't even exist when he made the earlier films. The film's vision of a world gone mad is, indeed, startling and evocative.

Halfway through the movie,I wasn't nuts about it, but by the time it was over, I'd changed my mind ... in part because while Fury Road is just one really long car chase, Miller does manage to insert just enough plot to keep the audience engaged. Hardy is fine, by Charlize Theron really steals the show as the one-armed Imperator Furiosa, who is desperately trying to help a group of women escape from the tyrant who has enslaved them. You have to like this kind of stuff to like Mad Max: Fury Road,and I'm glad stuck with it.


I also saw Kingsman: The Secret Service, the James Bond-parody starring Colin Firth, Michael Caine and Taron Egerton, the latter as a young man recruited into Her Majesty's Secret Service, ending up doing battle with a mad internet tycoon, played for laughs by Samuel L. Jackson.

In this case, I liked the first half of the movie, but disliked the second half, as it devolved into senseless violence and silliness. The actors were all good, but were let down by a script that didn't seem to understand that while less often is more, more often is way too much.


Finally, I was most disappointed by A Walk InThe Woods the very loose adaptation of the Bill Bryson book about walking the Appalachian trail, starring Robert Redford and Nick Nolte. One of the changes made for the movie is that Redford's Bryson is much older, and so the hike becomes about proving oneself at an advanced age. The problem is that the writing is like that of a sit-com, the direction is pedestrian, and there is no chemistry at all between Redford and Nolte, who are supposed to be old but entirely dissimilar friends. (Redford at one point was going to do it with Paul Newman, who died before they could make the film. That would've been a lot more interesting.)

I hate it when, while watching a movie, I can see plot holes through which I could drive a large truck and start fixating on them; if I'm paying attention to the holes (and this movies has dozens), then I'm not involved with the characters. Bad sign. For me, there was hardly a real moment in this movie - everything seemed staged, random, and largely without roots in basic human emotions.

I love Redford as an actor. I think the world of Bill Bryson as a writer. (His "In A Sunburned Country" is one of my favorite books.) And I feel bad that for me, "A Walk in the Woods" ended up being a complete misfire.



I'm thrilled to have Stephen Colbert back on TV hosting "The Late Show," but I have to say that I think the producers are trying to stuff 20 pounds of flour in a 10 pound bag. I know there are certain things that late night talk shows are supposed to do, but this week at least, I would've been happy to watch Colbert interview Jeb Bush and Elon Musk, and not bother with George Clooney and Scarlett Johansen. Or maybe they need to cut back on the comedy bits at the front of the show.

In Colbert, CBS has a guy who is smart, amazingly fast, and erudite ... and they ought to let him be all those things and not worry so much about the Hollywood stuff. That said, Colbert - the person and the show - seems to be bursting at the seams, he's so happy to be back on TV ... and maybe after a few weeks things will calm down a bit.

I'll also tell you something else. Last night's interview with Vice President Joe Biden was an extraordinary piece of television, showing us two people who were, at least in the moment, completely without artifice. It was raw, human emotion. It was captivating TV.

On the basis of that alone, I'm willing to hang in for the duration.




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

Slàinte!

Published on: September 11, 2015

A Note from the Content Guy: Here's what I wrote three years ago on this date...

To be honest, I struggle each year with what to write on September 11.

Living in a suburb of New York City, I have vivid and personal memories of that day 11 years ago, that crisp and gorgeous September morning that quickly devolved into a kind of hell. People I knew died in the attack on the World Trade Center. We attended funerals. And every time I go into New York City, or travel to the airport, I am aware of the empty space in the Manhattan skyline, and the emptiness in so many people's lives that was created that September day.

I remember how, working on another website at the time (that would quickly go out of business within weeks of the attack), it was extraordinary how readers closed ranks and shared their feelings online in enormously personal and compelling ways. They expressed solidarity and compassion, mourning and disbelief, and did it in a kind of emotionally naked way that, for me, changed the way I viewed the internet and what I wanted to do with my little segment of it.

Words never seem to suffice on this morning every year. The days and months pass, and the events of 9-11 seem ever distant, but it is not hard conjure up the vivid memories of that tragic day., and to recall even the physical sensations attached to them. Sense memory, they call it in the theatre.

Even today, so little of what happened that day makes any sense at all. Except that our eyes were opened not just to the vulnerability that sometimes is the cost in living in a free society, but to how, even in the worst of times, we can show the best of ourselves.

Published on: September 11, 2015