retail news in context, analysis with attitude

Published on: September 22, 2015

by Michael Sansolo

For a second let’s forget all our feelings about the current crop of political candidates and accept the possibility that the entire process might be able to impart some interesting business lessons. And this time, I don’t even think I have to stretch as far as usual for a business metaphor.

We can make an argument that there’s something to be learned about competition and outreach from both Donald Trump and Bernie Sanders. Given how diametrically opposite they are politically, the first thing to do - from a business lesson perspective - is to ignore their positions.

Let start with Trump, because these days that’s the single best way to get attention to any kind of blog post. No matter what you think of the man and his opinions, there is a single, indisputable fact about the flamboyant real estate developer: he isn’t playing by the rules.

With every move he makes, Trump violates all the maxims of politics. He says things no one else would say, seems unconcerned with everything from fund raising to the realities of governing. Love or loathe him, he’s a unique show.

For those of us in business, there’s an important reality in that. We frequently see disruptive forces in the market that upend the way business is usually done. Years ago it was the discussion surrounding Walmart, clubs, discounter drug stores and other non-traditional forms of competition. Today it’s the endless run of e-commerce players, many of which seem unconcerned about turning a profit.

The truth is that not all of these disrupters succeed - seen any Phar-Mor stores recently? - but nearly all found a way to alter the market place by doing things others thought impossible. And while there is an argument to be made that at times they do things that are unsustainable or unrealistic, the reality is that rule breakers challenge the status quo. They certainly change consumer expectations, and everybody else has to deal with the repercussions.

We can’t anticipate rule breakers or properly plan for them, but we need to have the mental disciplines, flexibility and creativity to deal with them when they come. Think about that as you watch more traditional Republican candidates try to determine a path to rebut the rise of Trump, Carly Fiorina or Ben Carson.

In addition, we always need reminders to challenge our own points of view and recently Vermont Senator Sanders did that with his own seemingly illogical presidential campaign. Just last week Sanders spoke at Liberty University, the school founded by Jerry Falwell that is known for its conservative values.

Sanders acknowledged that his positions were strongly at odds with the opinions held by the students of the school, but made the point that leaders need to escape the echo chamber of cheering crowds of supporters. Both Sanders and Liberty should be applauded for the willingness to engage in discussion, even if not a single vote was changed on that day.

Again, for business leaders the lesson is clear. We need engage those different from ourselves whenever possible. We need to seek out folks with work with you look, think and act differently from us, rather than those who see the world the same way we do.

When we do that, we open ourselves up to different perspectives, new ideas and hopefully new opportunities. It might even prepare us for when the rule breakers come along with radically different ideas and approaches.


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: September 22, 2015

by Kevin Coupe

in his column above, Michael Sansolo offers two business lessons gleaned from the current political landscape - the need to disrupt, and the importance of engaging with people different from ourselves. (Frankly, most of the current political discourse makes me want to take a shower ... so I'm glad Michael came up with a redeeming characteristic.)

Interestingly, both lessons are reflected in a story posted on The Drum about how Nestlé's German division "has embraced reverse mentoring with young digital natives educating c-level executives ... believing it can close the digital knowledge gap for older employees who haven’t fully grasped digital skills like social media. The move to school executives in millennial thinking comes as Nestlé continues to drive forward its company-wide digital transformation."

“It’s such an unbelievable experience… because it’s not only understanding the digital world it’s also understanding different perspectives from different generations,” says the new CEO of the german business, Beatrice Guillame-Grabisch, who, the story notes, "has a female mentor in her twenties."

Of course, it cuts both ways.

One of this weekend's major studio releases is The Intern, a Nancy Myers movie about a young e-commerce CEO played by Anne Hathaway who ends up being schooled in non-digital work and life issues by a "senior intern" played by Robert De Niro, who has both years and mileage, and a lot of accumulated wisdom.

In life and business, it seems to me, a pretty good guiding principle is that there is a lot to learn from other people ... including people who don't look like us or think like us or act like us. (No matter who "us" is.) It quite literally can be an Eye-Opener.

The people who scare the hell out of me are the people who think they know everything, who are so busy talking that they never listen. no matter what their age.

Published on: September 22, 2015

National Public Radio reports that Stewart Parnell, the former owner/CEO of Peanut Corporation of America (PCA), was sentenced yesterday to 28 years in prison after his conviction for knowingly shipping salmonella-tainted peanut butter that eventually was linked to nine deaths and hundreds of sickened consumers.

The US Department of Justice says that it is the "harshest criminal sentence ever in a food safety case." The story notes that "his brother and food broker, Michael Parnell, was sentenced to 20 years and manager Mary Wilkerson received a five-year sentence."

Parnell, the story notes, faced a possible 803 years in prison based on the crimes for which he was convicted, and said that "these acts were driven simply by the desire to profit and to protect profits notwithstanding the known risks. This is commonly and accurately referred to as greed."

However, Parnell is 61 years old ... and so a 28 year sentence - if he serves the entire term - is a virtual life sentence.

The Wall Street Journal writes that "the prison sentence ... highlights the government’s stricter enforcement of food-safety laws following several major outbreaks of foodborne illnesses over the past decade. The lengthy term in part reflects the overwhelming evidence presented by federal prosecutors that Mr. Parnell knowingly led a scheme to ship tainted products, as well as the large number of people affected by the outbreak and the financial losses incurred, according to lawyers involved in food-safety cases ... Since 2013, the government has secured convictions or guilty pleas in four criminal cases, all of which fell under the 1938 Federal Food, Drug and Cosmetic Act. That is roughly equivalent to the number of convictions or guilty pleas won by the agency under the same act in the 24-year-period from 1988 through 2012."

Parnell's attorneys say they plan to appeal.

Published on: September 22, 2015

The Santa Barbara Independent reports that a single Haggen supermarket in the Mesa neighborhood of Santa Barbara owes more than $93,000 in unpaid rent that has forced local property supervisors to post a public notice on the store's front door - the chain must may its rent and fees within 10 days or vacate the space.

The story says that Haggen has not paid its rent since June 26.

As has been well documented here on MNB and elsewhere, Haggen has been experiencing a series of problems since the 18-store Pacific Northwest chain expanded by more than 140 stores when it acquired stores in Oregon, California, Nevada and Arizona that needed to be divested when Albertsons purchased Safeway. Almost from the beginning, Haggen was accused of having high and uncompetitive prices and not being attuned to local markets, which led to low customer traffic and poor sales; that led to problems paying suppliers, which led to out-of-stocks, which led to even lower traffic and sales....and so on.

The Independent also reports that one store employee told the paper that the store has not received a shipment of product since the company declared bankruptcy two weeks ago, and that "a recent visit to the market revealed rows of empty shelves and obvious product shortages."

Published on: September 22, 2015

Bloomberg reports that the Great Atlantic & Pacific Tea Co. (A&P) has received bankruptcy court approval to sell 95 of its stores for $370 million.

The story says that "Acme Markets Inc. is buying 71 stores from Great Atlantic & Pacific Tea Co. for $246 million, while Stop & Shop Supermarket Co. is taking on 24 locations for $124 million ... The deals will keep more than 10,750 people employed. Acme and Stop & Shop expect to reach labor agreements with the union representing workers at those stores."

An auction is scheduled for October 1-2 for additional A&P assets.

A&P filed for bankruptcy last July, and had announced that it is selling all its assets and closing the chain down.

Published on: September 22, 2015

Fast Company reports that boxed meal kit company Blue Apron "has just launched Blue Apron Wine. This service, which is currently only available to Blue Apron customers, delivers bottles that are designed to pair with the meals that will be delivered that month. Each Blue Apron Wine delivery includes six 500ml bottles of wine at a cost of $65.99 per month including shipping. Customers are free to skip a month or cancel at any time."

The story goes on to note that "the company has hired a team of sommeliers who are working with independent winemakers around the world to produce wines that will only be available to Blue Apron customers. In some cases, the wines will be limited-edition vintages ... Given that different states have different regulations about shipping wine, Blue Apron Wine is only able to deliver to 28 states and is currently working with a partner, Terravant Wine Company, to expand to new states."

Published on: September 22, 2015

Interesting piece in the Milwaukee Journal-Sentinel about how Sendik's there is using grinding systems that turn food scraps into energy at 11 of its 12 stores.

According to the story, "Sendik's has been shipping food scraps to be used as compost in recent years, but the new systems is able to accommodate food waste beyond produce. That includes grease from cooking meat and leftover items from Sendik's delis that can't be composted ... The ground and liquefied food waste stored in tanks at each store is then trucked to the Potawatomi Hotel & Casino complex, where the waste-to-energy project the tribe opened in 2013 stands just west of the hotel on Canal St."

At Sendik's, the Sentinel writes, "the company expects to eliminate the equivalent of 4.7 million car miles worth of greenhouse gas emissions through the waste to energy process. The food waste is expected to generate enough natural gas to heat 1,500 homes for a month, and create more than 407,000 pounds of fertilizer."

The story goes on to say that "some chains elsewhere are moving even further, as more states ban organic waste from landfills. In Massachusetts, the grocery chain Stop & Shop is building its own power plant to turn food waste into electricity."

The systems being used by Sendik's are designed by InSinkerator's Grind2Energy division.

Published on: September 22, 2015

The New Republic has an interesting story about the new Boston Public Market, described as "the country’s only year-round covered food market with a mandate to sell foods made almost entirely from locally grown ingredients.

"Getting the market open this July was a 14-year effort that involved raising $9 million in private funds, winning over state and local officials to provide $6.5 million in buildings and benefits, and lining up more than 35 local businesses willing to take their chances that they would have enough goods to sell - and customers to buy them - during the interminable Boston winter."

The story notes that "as any regular farmers’ market visitor knows, a good market is about more than buying food—it’s about striking up conversations, exchanging information, feeling part of a community and actively contributing to it." And in many ways, by showing how the Boston Public Market shows, it reflects some of the attributes that can make for a great and engaging retail experience.

You can read the entire piece here.

And, if you're interested, there is a piece I wrote a couple of years ago about the James Beard Public Market that is being built in Portland, Oregon ... which you can read here.

Published on: September 22, 2015

• Business Insider has a story about how Wayne Hood at BMO Capital Markets says that "grocery sales, which make up 56% of all of Wal-Mart's sales, have been plagued by miserable customer satisfaction ratings and slowing comparable store sales growth ... Hood said these trends indicate that Wal-Mart is beginning to lose market share in the US grocery industry, which generates $161 billion in revenue every year."

Hood says that from his perspective, Walmart has to address the customer experience in its stores if it wants to reverse this trend: ""Importantly, we believe customer service scores may need to exceed peers to drive meaningful growth and this may require a transformational change in the company’s culture away from focusing on store level tasking and merchandise-driven lowest landed cost strategies to one of increasing customer service through knowledgeable engaged associates."

However, he also concedes that such a cultural shift can take years to accomplish, and that Walmart's grocery sales indeed could fall even more during the transition.

Published on: September 22, 2015

The New York Times reports that Daniel Thompson, who five decades ago invented an automated bagel machine that the story says was "seen variously as saving grace and sacrilege," has passed away at age 94.

The story says that Thompson was "a California math teacher turned inventor," and "a shaper of postwar suburban culture in more than one respect: He also created the first wheeled, folding Ping-Pong table, a fixture of American basements from the mid-20th century onward."

Published on: September 22, 2015

• The Indianapolis Star reports that Instacart is saying that its initial foray into the Indianapolis market - delivering product for companies that include Whole Foods, Georgetown Market, Costco, Marsh Supermarkets and Petco - has been so successful that it is expanding its geographic delivery area.


• DC Velocity reports that Home Depot has "opened its third direct-fulfillment center to support its e-commerce ordering and delivery strategy, bringing to 3.6 million the amount of square feet of DC space to handle online sales and fulfillment. The new location, in Troy Township, Ohio, near Toledo, has 1.6 million square feet, making it the largest of the three facilities."

The story goes on to say that "with the third facility operational, Home Depot said it can now deliver 90 percent of all online orders within two days using ground parcel services. Online sales accounted for about 5 percent of the home improvement giant's $24.8 billion in revenue during its fiscal-2015 second quarter. That represents a 25 percent year-over-year increase."


• The Charlotte Observer reports that Publix is expanding its on-demand delivery service - provided by Shipt - to the Charlotte market next week. The company already is serving several Florida cities as well as Atlanta.

Published on: September 22, 2015

• Reuters reports that Sears Holdings Co. has hired Girish Lakshman, a former vice president of worldwide transportation strategy, technology and customer returns at Amazon, to be its president of fulfillment, described as "a new position with oversight over supply chain and inventory management."

Published on: September 22, 2015

From one MNB user, responding to a story we posted yesterday...

It's been a long time coming for Hy-Vee to enter the Twin Cities market and the buzz around town is amazing.

This market is ripe for a top notch grocer.  I have lived here for 22 years and have been working with some of the best grocers most of my career.  With Rainbow gone (they once had 30% share along with Cub), there is plenty of room for a newbie.

My take on the current landscape:

• Cub Foods does a nice job but some of their stores need to be remodeled as their floor plans are not consistent. Great prices and nice fuel program with the best gas provider in Holiday Station Stores.

• Lund's/Byerlys have great stores but you pay for it with higher prices and less product selections but that is their niche. Nicest midwest stores - similar to Dierbergs in St. Louis.

• Target is a lost cause- they have entered the grocery arena and just don't get it. They need to visit Meijer and see how real super stores work. Maybe the new CEO can figure it out but early indications is they still think of themselves as a niche retailer when if they did it right with grocery, they could blow the competition away and drive people to other parts of the store to buy higher margin items. The big beef with them is constant out of stocks in the grocery department- unacceptable for a retailer that size.

• Walmart is Walmart and they are designed for a certain shopper. This market is so enamored with Target, I am surprised they do as well as they do but it's all about price.

• Costco, Trader Joes & Whole Foods all have their place in the market and serve their customers well.

• Coborns of St Cloud-  I thought for sure they would gobble up the failing Rainbow stores but they appear content to stay on the outskirts of the suburbs and try to may headway with Coborns Delivers. Too bad as they have nice stores too.

Hy-Vee is making a big commitment to the market, indicating the desire to add 4 stores per year and joining the Minnesota Vikings as a 10 year sponsor of their new stadium next year(nice get for them).  Having worked with Hy-Vee and having grown up in Iowa, we are excited for their arrival. Their managers have a vested interested in making their stores successful and it will show in the long run. It will be fun to see how the locals try to combat the outsider, especially one from Iowa...




And regarding a microunion forming at a Brooklyn, New York, Target store, one MNB user wrote:

The vote for a so called microunion in Target’s store in Brooklyn NY will make any retailer think twice about opening stores to service New York’s boroughs.  There are no Walmart stores in any of the 5 boroughs in New York.  As a result, the Walmart stores that border New York are extremely high volume - Valley Stream NY, Secaucus NJ, etc.

Published on: September 22, 2015

In Monday Night Football action, the New York Jets defeated the Indianapolis Colts 20-7.