retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: September 29, 2015

    by Michael Sansolo

    There are two firm rules here at MNB. First, we believe there are business lessons in everything happening around us and, second, both Kevin and I are endlessly devoted to the New York Mets.

    This is a great week for us. The Mets are the National League East champions, and their unexpected ascent offers a business lesson. It's a win-win situation. Pass the champagne.

    During the past decade, the New York Mets typically spent September losing meaningless games to end another terrible season; when the games were meaningful, fans would simply wait for the inevitable collapse. That leaves loyal fans uttering the line spoken by fans of every losing team - wait 'til next year! - and searching for some reason for optimism. Yes, I know there are other terrible teams, but the Mets are special - the owners, after all, found themselves embroiled in the Bernie Madoff scandal, leaving the franchise so financially compromised that they could barely make payroll at times.

    This season was not supposed to be any different, especially because the Washington Nationals, a team in the Mets division, was widely expected to be the best team in baseball. Virtually every pre-season prediction called for the Nationals to do very, very well and the Mets to be, well, the Mets.

    But the rule in baseball is that the games must still be played and that pre-season predictions count for nothing. Thanks to incredible circumstances that defy easy explanation, the Mets started off with a bang, played solidly for most of the season and then, thanks to savvy transactions made before the trading deadline and some often extraordinary starting pitching, played extremely well for the past two months.

    This weekend, the New York Mets officially eliminated the Washington Nationals from the playoffs. Just like that, the Mets - our Mets - have to be taken seriously as the postseason begins.

    In baseball or business, we need remember that we make our reputation every day and through every customer. What we did yesterday never matters. Every element of our business must work to maximum effectiveness daily or we start fading.

    Predictions and reputations are meaningless; performance is all that matters. It’s doesn’t matter if you are running a small team, a single-store operation or overseeing a multi-billion dollar corporation. The same rule holds true.

    In business we cannot take anything for granted because complacency or arrogance never, ever lead to anything good.

    (It’s important to add that we could also glean countless lessons for how the Nationals have responded to their unexpected demise. "Team turmoil" is an understatement, since the tensions resulted last weekend in relief pitcher Jonathan Papelbon grabbing teammate Bryce Harper by the neck in the dugout during a game. It is a picture that many of you have seen, and it is a picture that defines the Nationals' season.

    I have two observations about this. First, it provides a sad and yet important lesson in the need for zero tolerance for workplace violence. Second, it illustrates the problems of absent management: Matt Williams, the team manager, was in the dugout, but sent Papelbon back on the field for the next inning. He either wasn't paying attention or decided it didn't matter, and I'm not sure which is worse. I expect him to be fired once the season is over, but he probably should have been fired immediately after the game.)

    Kevin is fond of quoting Robert B. Parker, one of his favorite authors, as saying that “baseball is the most important thing that doesn’t matter." I agree. As we all learned from Field of Dreams, baseball is the essence of our society and history in ways that few things are.

    "The one constant through all the years Ray, has been baseball. America has rolled by like an army of steamrollers. It’s been erased like a blackboard, rebuilt and erased again. But baseball has marked the time. This field, this game, is a part of our past, Ray. It reminds us of all that once was good, and that could be again."

    Baseball gives us countless lessons in skills, preparation, mental toughness and simply the need to play all the games, no matter your history or past performance. It’s a lesson that shouldn’t be wasted.

    As for us, we await the first round of the playoffs, and that wonderful moment when the New York Mets take the field. Play ball.

    Michael Sansolo can be reached via email at . 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.
    KC's View:

    Published on: September 29, 2015

    by Kevin Coupe

    The New York Times reports this morning that "the uncensored chef, author and peripatetic culinary traveler" Anthony Bourdain has unveiled plans to open a new food market on West 15th Street in Manhattan, on the main concourse and mezzanine of Pier 57, one of the largest shipping piers on the Hudson."

    In about two years, the story says, Bourdain and his partners "plan to open Bourdain Market, a vast collection of about 100 retail and wholesale food vendors from New York, the nation and overseas, including fishmongers, butchers, bakers and other artisans, and eventually at least one full-service restaurant. April Bloomfield and Ken Friedman, who own the Spotted Pig, the Breslin and other restaurants, have already agreed to operate two prepared-food stalls.

    "But 'the beating heart and soul' of the project, Mr. Bourdain said, will be a Singapore-style hawker market, with communal eating spaces surrounded by small stands selling street foods from around the world - many of them mom-and-pop operations that Mr. Bourdain and his team plan to bring here."

    Bourdain says that the project is "driven by his determination to bring people closer to the kind of kinetic experiences he shows on TV, and to share the food he is passionate about."

    I've always admired Bourdain's willingness to try pretty much anything once, though he's certainly willing to go places I probably wouldn't, consuming things like raw seal eye, bull penis, and fetal duck egg. But I'm actually more intrigued by his approach to retailing, which seems to build not just on global street markets, but also on what formats like Eataly have made work in major American metropolitan areas.

    Great retailing has a degree of theater to it, and it works because theater requires a narrative ... and retailing that tells a story always is going to be most effective.

    I can't wait to see the new Bourdain Market. The odds are pretty good that it will be an Eye-Opener.
    KC's View:

    Published on: September 29, 2015

    Whole Foods announced yesterday that it will eliminate approximately 1,500 jobs, or 1.6 percent of its workforce, before the end of the year.

    The company said that the layoffs are part of its "ongoing commitment to lower prices for its customers and invest in technology upgrades while improving its cost structure."

    Whole Foods also said that it could achieve the majority of the cuts through "natural attrition," and that people laid off could apply for other jobs within the company. Fortune reports that Whole Foods "has 2,000 open positions and more than 100 new stores in some stage of development."

    In a prepared statement. co-CEO Walter Robb said that "this is a very difficult decision, and we are committed to treating affected Team Members in a caring and respectful manner ... We have offered them several options including transition pay, a generous severance, or the opportunity to apply for other jobs. In addition, we will pay these Team Members in full over the next eight weeks as they decide which option to choose. We believe this is an important step to evolve Whole Foods Market in a rapidly changing marketplace.”
    KC's View:
    Most of the commentary about this move suggests that Whole Foods is right-sizing with an eye on the competition - as more and more companies get into the organics business, it puts pressure on Whole Foods to both lower prices and make its appeal somehow less exclusive while still maintaining the narrative that has defined it. That's a tough balancing act, in my view.

    It also is interesting to see that Whole Foods is talking about lowering prices and investing in technology at its stores, since that's also the approach that it has said it is taking in its planned "365" chain that is supposed to have greater appeal to millennials. This raises the questions that, to be honest, I've wondered about all along. How, exactly, will "365" be different? Is it "Whole Foods Lite"? And how will Whole Foods keep it from diluting the flagship's brand? It can be done, but it won't be easy.

    I also wonder to what extent this move is more aimed at Wall Street than Main Street, since it looks like all those people could keep jobs at Whole Foods if they want to and circumstances allow. On the other hand, Whole Foods' stock price is down 40 percent over the past six months ... and public companies often do things like layoffs when they want to assure the investment class that things are under control and moving in the right direction.

    I'm a firm believer that Wall Street-oriented solutions rarely solve Main Street-centric problems.

    I'm not entirely sure that this is the case with Whole Foods. But I'm suspicious.

    By the way ... Stephen Colbert had a great line about these layoffs on last night "The Late Show," commenting that the move "will save Whole Foods hundreds of thousands of dollars, or the price of six tomatoes."


    Published on: September 29, 2015

    Crain's Chicago Business reports that the opening of Mariano's Fresh Market stores in the Chicago area have created an opportunity for commercial real estate investors, who have "shown an insatiable appetite for Mariano's stores or shopping centers anchored by the grocer. Since the start of 2014, investors have spent more than $300 million on the properties. And they are paying such high prices that the developers that built shopping centers anchored by Mariano's stores are cashing out for fat profits."

    The story notes that "more than one-third of Mariano's 32 stores have been sold since 2011, and others are on the market in Chicago's Lakeview neighborhood and in the suburbs of Glenview, Northbrook, Frankfort and Harwood Heights."

    Crain's points out that the Mariano's operation is a bright spot for owner Roundy's, which "is saddled with high debt and the stagnation of its Pick 'n Save brand in Wisconsin, resulting in a lower credit rating than competitors' ... Mariano's projects it will have 39 stores by the end of 2016, according to an August presentation to investors. It is forecasting it will be on pace for $1.5 billion in annual sales by the end of this year, according to the presentation. Mariano's had $533.6 million in sales in 2013, when it grew to 13 stores from eight, and $1.12 billion in sales in 2014, when it grew to 29 stores."
    KC's View:
    One of the persistent criticisms of the Mariano's operation has been that the low prices that it has featured on grocery items - which complements the exceptional fresh foods presentation on the perimeter - were not sustainable, and that the company was using them to build market share and eventually would have to raise them, which could hurt its image.

    I've made this observation more than a few times, but to date, this hasn't happened ... so maybe it won't. And I have to say that I think the Mariano's stores are pretty great ... I'd certainly shop there if I lived in Chicago.

    Published on: September 29, 2015

    The Wall Street Journal reports that Wakefern Food Corp. is buying 12 stores from the bankrupt Great Atlantic & Pacific Tea Co. (A&P) for $40 million. According to the story, "The stores being sold are 11 A&P, Pathmark and Waldbaums stores in New York and Pennsylvania and one A&P store in Connecticut. Several of the stores are in Philadelphia or the surrounding areas."

    The story notes that there is the possibility of competing bids, and if they emerge, "A&P will hold an Oct. 8 auction for the stores. If another bidder wins, that party must pay Wakefern a $1.2 million breakup fee."

    The Journal writes that "earlier this week, a judge approved the sale of 95 A&P stores to rivals Albertsons Cos. and Stop & Shop Supermarket Co. for a total of $369 million."
    KC's View:

    Published on: September 29, 2015

    The Wall Street Journal reports that "European Union regulators have opened a detailed investigation into Staples Inc. ’s $6.3 billion planned acquisition of Office Depot Inc., warning the deal could lead to price increases and less choice for business customers.

    "The deal, announced in February, would leave the U.S. with one chain of office-supply superstores, reduced from three in a couple of years, following Office Depot’s acquisition of OfficeMax in 2013. Regulators in the U.S., Europe and Canada have yet to approve the latest deal."
    KC's View:
    I'm not an antitrust lawyer, but ... it seems to me that regulators on both sides of the Atlantic have to be careful about applying old world rules to new world competitive models. While a merger might leave Staples as the only category killer-style office supply store around, it hardly is without competition ... there are e-commerce retailers like Amazon, and omnichannel retailers like Walmart, that provide plenty of competition. It may be that the only way to compete with Walmart and Amazon is to merge ... and that without a merger, they simply may not be able to survive.

    That said, the Haggen scenario proves that antitrust regulators charged with preserving competition often don't apply or understand the new rules of the competitive road. This may be an opportunity for the bureaucrats to prove that they don't have their heads in the sand...or buried somewhere else.

    Published on: September 29, 2015

    The New York Times has a story about the newest challenge facing marketers...

    "Marketers have long coveted the attention of 18- to 34-year-olds, and this generation is no exception," the Times writes. "The consumers in this age group, the thinking goes, are young and influential, and many are getting married and having children. They have discretionary income and are making big purchases like houses and cars. They are also deciding which brands they are likely to remain loyal to for the rest of their lives.

    "But this generation — the millennials — is also harder to reach. Millennials spend more time watching television shows on demand or streaming them on services like Netflix and Amazon. They tend to have short attention spans and bounce rapidly among smartphones, tablets and desktop computers ... As a result, advertisers are racing to adapt to the shifting media habits of millennials, and much of that effort is going toward developing new ways to connect with them on smartphones and tablets."

    Good and provocative piece, and you can read it here.
    KC's View:
    I saw an ad guy on TV saying that it no longer is about digital marketing ... it is about marketing in a digital world. Which is far more than a semantic difference.

    Published on: September 29, 2015

    Fortune writes that "despite China’s slowing economy, Alibaba Chairman Jack Ma says his Chinese e-commerce giant is still growing and is on track to exceed Walmart in sales volume this year ... Ma’s comments are aimed at calming investor concern about Alibaba’s direction. Following a blockbuster IPO a year ago, it has since taken a beating over concerns about its growth and a stock price hat has fallen 40% since the beginning of the year."

    Ma says that consumption continues to rise on Alibaba, "because when the economy goes down people look online to Alibaba to buy cheaper things." The story says that Ma strenuously refuted accusations from some quarters that Alibaba has been faking its numbers to support its claims of growth.
    KC's View:

    Published on: September 29, 2015

    • The Associated Press reports that "Chipotle says carnitas are back on the menu at 90 percent of its restaurants, and that the pork's return to all U.S. restaurants should be complete by the end of November.

    "The Mexican food chain had stopped serving pork at about a third of its restaurants in January after it said one of its suppliers violated its animal welfare standards. Chipotle has not disclosed the supplier in question, but said the violation centered on how it was housing its pigs."
    KC's View:

    Published on: September 29, 2015

    Yesterday, MNB took note of a Los Angeles Times story saying that the Hydrox cookie is back, being sold by Leaf Brands exclusively on Amazon. We noted how previous owners had changed the name, then stopped selling the cookie and even let the trademark lapse ... which opened the door for an entrepreneur to buy the trademark rights and work to bring the cookie - of which he had cherished childhood memories - back to the market.

    Well, we got an email yesterday from Ellia Kassoff, who happens to be the entrepreneur in question, as well as CEO of Leaf Brands:

    I read your comments about how the Hydrox cookie brand was mismanaged by Keebler and then Kellogg’s.  I totally agree.  They changed the formulas, changed the name, alienated their core customer base and then said Hydrox failed!  Big companies make stupid decisions.  I received a call from an old Kellogg’s executive who told me they simply had too many people trying to make a name for themselves and figured by “tweaking” the product, they would get credit for its success.

    Great lesson about how to nurture a brand. And how to screw it up. Everybody and every company makes these kinds of mistakes ... and it is nice to see an iconic brand rise from the ashes.

    BTW ... NPR had a story about the Hydrox cookie that is worth a listen here.
    KC's View:

    Published on: September 29, 2015

    In Monday Night Football action, the Green Bay Packers defeated the Kansas City Chiefs 38-28.
    KC's View: