retail news in context, analysis with attitude

Published on: October 9, 2015

by Kevin Coupe

Advertising Age reports that Campbell Soup has developed a new application for the Amazon Echo - a tubular, internet-connected voice command device that can answer questions, play music, provide news and weather - that will allow it to suggest recipes to users "based on preferences, the weather and what's trending."

Campbell is said to be the first CPG company to develop such an app for Echo, though others are in various stages of development.

To be clear, this is still early stages ... the story makes it clear that there is much work to do to make this really effective. But I've written here before about how impressed I am by the Echo, and the degree to which my 21-year-old daughter uses it ... which makes me think that the Campbell idea is a very smart confluence of technology and a great idea.

The connected kitchen will be here before you know it, and companies have to start getting ready. Amazon certainly is, and that's the behemoth with which companies are going to have to compete or cooperate.

It is an Eye-Opener.

Published on: October 9, 2015

The Seattle Times reports on a minor local intrigue about a vacant retail space in the University Place shopping center - nobody seems to know who the tenant is, the landlord isn't talking, and all anyone does know for sure is that there are bookshelves being built inside.

Which makes everybody think that it is Amazon, planning to open a bricks-and-mortar store in a location that, the Times writes, "with its proximity to the UW and the literary population of Seattle ... may be one of the best places in the country for a bookshop."

The Times seems to think that it is at least possible: "Opening a physical retail store has become the new vogue thing for e-commerce companies. Warby Parker, an online eyewear company, set up shop in Seattle’s Fremont neighborhood. Smaller outdoor online retailers MiiR and Evo are expanding their physical retail presences in the city."

Plus, "Amazon does seem to be up to something within its bookseller roots. Robert Sindelar, managing partner at the popular Seattle shop Third Place Books, said a few of his booksellers were contacted by Amazon recruiters on LinkedIn. The booksellers didn’t follow up with the recruiter, but from what they could tell, the project seemed related to a retail establishment.

"Amazon has opened a few staffed pickup locations on or near college campuses in recent months, including an upcoming location in Cincinnati uncovered Thursday. U Village’s proximity to the University of Washington has added to rumors of Amazon’s possible entrance."

Published on: October 9, 2015

Variety reports that Netflix is raising the price of its popular "standard" plan, which allows for the streaming of two movies at the same time, to $9.99 per month from $8.99.

According to the story, "Netflix said that current pricing for existing subscribers on the “standard” plan will remain in place for 12 months, unless they’re already covered by a price guarantee with a longer term ... It’s the company’s second price hike in the U.S. in less than two years."

The last increase, from $7.99 to $8.99, was in May 2014, at which point Netflix promised that it would not increase rates again for two years.

Other Netflix plans, which include things like DVD rentals, are not affected by this increase.

Published on: October 9, 2015

In the UK, City AM reports that members of Tesco's board of directors have purchased more than three quarter of a million dollars worth of company stock, a day after the company revealed that its half-year operating profit was down 55 percent - a reflection of continuing weakness in he company's home market.

CEO Dave Lewis bought more than $300,000 worth of stock, with the rest bought by other members of the board.

Lewis had been criticized for not investing in the company that he now leads, but he said yesterday that the board had recused itself from buying shares while an investigation was conducted into an accounting scandal; Tesco was being probed for having overstated revenue and understand expenses as a way of driving up its stock price. "We excluded ourselves from buying Tesco shares because we had inside information and it wouldn’t have been appropriate for us to trade shares and because we thought that was good corporate governance,” he said yesterday.

Published on: October 9, 2015

• In Minnesota, the Star Tribune reports that Amazon has begun offering its Prime Now service to Minneapolis and St. Paul residents, providing one-hour delivery.

The story notes that "customers of its $99-a-year Prime loyalty program can get one-hour delivery for $7.99 or two-hour delivery for free on a limited number of grocery and other items. A minimum purchase of $20 is required ... This is the 14th metropolitan market where the online retailing giant has launched its Prime Now service, which first debuted in New York last December."


• Internet Retailer has a story about how Mondelz International "recently rolled out mobile technology that allows its merchandisers and sales reps to visit retail locations and make sure its products are stacked, promoted and served up the way Mondelz wants across some 26 countries." Eventually, the story says, Mondelz "wants to achieve that level of standardization across the 140 countries where it sells its products."

Published on: October 9, 2015

• The BBC reports that China Resources SZITIC Trust, which is the investment arm of the China Resources Corporation, plans to sell its 21 percent stake in 21 Walmart stores in China.

The story notes that "Walmart has seen its sales growth in China slow in the past five years," and that earlier this year, Walmart "announced that it planned to open 115 new stores in China by 2017 - increasing the number of stores there by almost a third."

Published on: October 9, 2015

• Re/code reports that in 2016, Apple Pay will be available for use at Starbucks, Chili's and KFC.

According to the story, "When Apple Pay was first launched in October 2014, critics pointed out that it didn’t work at many stores. Over the past year, the company has slowly brought on more merchants — although its coverage is still far from comprehensive — and integrated store loyalty programs to woo customers."

Re/code notes that "Starbucks already has a hugely successful mobile payments service built into its own app, which accounts for 20 percent of all Starbucks in-store transactions. That service is connected to Starbucks’ loyalty program, meaning people who use their app to pay earn rewards in the process." There is no word about whether Starbucks customers who use Apple Pay will get Starbucks reward points.


• The Baltimore Sun reports that C&S Wholesale Grocers plans to close two Maryland distribution centers that have been serving Safeway stores in the region and move those operations to other facilities. The decision is likely to affect as many as 700 full-time and part-time employees, the story says.


• The Teamsters said yesterday that it has reached a tentative agreement with Ralphs, Vons and Albertsons, and that unionized employees will vote on the pact at the end of next week. The new deal would avoid a strike that was authorized a couple of weeks ago.

The announcement notes that the pact, if approved, would cover more than 8,000 drivers, warehouse, dairy and manufacturing workers at the three chains.

Published on: October 9, 2015

• Publix has announced that David Bridges, vice president of Fresh Product Business Development, will retire from the company after 49 years of service.

On January 1, when Bridges’s retirement takes effect, Atlanta Division Regional Director Chris Litz will be promoted to vice president of Fresh Product Business Development.


• GreenBiz reports that Laura Phillips, a 20-year Walmart veteran who most recently has been a senior vice president developing its omnichannel strategies, has been named senior vice president of sustainability. The shift is effective January 1.

Published on: October 9, 2015

Paul Prudhomme, the Cajun chef who popularized Louisiana food such as gumbo and jambalaya through his K-Paul's Louisiana Kitchen in New Orleans, as well as a line of spices and rubs and a selection of cookbooks, has passed away after what is termed "a brief illness." He was 75.

Published on: October 9, 2015

We had a story the other day about antitrust questions being raised about the proposed Staples-Office Depot merger, but I argued that the new competitive environment - Staples and Office Depot compete not just with each other, but also with Walmart, Amazon and countless other venues both physical and vertical - means that regulatory officials have to begin thinking differently.

But MNB reader Celeste Kososki disagreed:

What’s really at stake in the Staples/Office Depot merger is the contract side of the equation.  So far, to the best of my knowledge, none of the competitors you mention have mega supply contracts with such entities as the federal government or numerous fortune one hundred companies like these two merging entities do.  Your list of competitors are applicable to the retail side, not the contract business and that’s where the Herfindahl Index comes into play.  
 
Someone at the FTC finally woke up.

Is there some rule saying that Walmart and/or Amazon cannot try to get those government contracts? Maybe the government would save some money...

On the other hand, one has to wonder if Staples and Office Depot are even being competitive these days. MNB reader Jerome Schindler wrote:

Got an email this morning from Staples, offering $10 off my next purchase if I would participate in a survey. I have been a member of the Staples rewards program for over 20 years and get their weekly promotional emails. So I clicked on the link.

The first survey question asked the participant to check the box indicating your age. 
I checked the "65 and over box".

Clicking "next" I got a message that essentially said that my age group did not qualify for the survey.  No $10 off next purchase for old people.

I have been a very good customer of Staples over the years, even in the seven years after I turned 65. In fact, in addition to some office supplies (and school supplies for my grandchildren), within the last month or so I have purchased a HP laser printer, a top of the line AC1900 wireless internet router, and a 2016 At-A-Glance desk appointment book, all at Staples.

At a minimum they should have exercised some transparency and stated in the email that the survey offer was only valid for persons under the age of 65.



On other subject, Michael Sansolo's column about credit card craziness, MNB reader Mark Heckman wrote:

Providing small retailers the choice between expensive technology upgrades or assuming more credit card risk is unacceptable.  In my view, those like Inmar that are investing in private label payment systems like Merchant Customer Exchange LLC (MCX) continues to make sense, the more that the big credit card services become increasingly onerous.




And regarding Walmart's layoffs, one MNB user wrote:

I believe you are right on target with your assessment that Walmart’s staff reduction is about savings.  There is an old but true axiom, “You cannot save yourself into prosperity.”.  Unfortunately too many top executives believe cutting staff means savings, ergo, more profit.  Not so fast, when you cut staff you cut far more than line entries on the debit side of the ledger, you cut part of yourself off and how valuable that missing part(s) are will definitely show up sooner or later.




I indulged in an anti-vaping rant yesterday, prompting MNB reader Daniel Hogan to write:

I smoked from when I was about 16 until I was 22 because I was a teenager and it was “cool”. I started vaping at 22 because obviously smoking is terrible, and my grandmother was in her final days of stage 4 lung cancer from a lifetime of smoking. I started with a higher nicotine level, slowly decreasing to lower levels, and about 6 months ago after 2.5 years of vaping I stopped completely. Vaping worked, and it’s worked for many of my peers.

Unfortunately, it has become appealing to young people, but so is essentially everything else that adults are able to do that juveniles cannot. While there is no long term research available to determine how vaping impacts one’s health, I know how my body felt from cigarettes and from vaping, and I physically felt so much better after the transition. Additionally, I felt even better after quitting vaping. I had a great conversation with my dentist about it when I made the switch, and he was very enthusiastic about the health benefits of vaping vs smoking. The percentage of American’s who smoke is at its lowest rate ever.

CVS has stopped selling tobacco products and focused on helping users quit (as all pharmacies should), and has set the stage for other retailers to do the same (I’m pretty sure it was MNB where I read the news about Price Chopper’s new Market32 stores abstaining from selling cigarettes). I see lots of positives from vaping, because I’m now nicotine free because it exists.

First of all, congratulations. I don't want to minimize the importance of what you did.

That said ... if vaping were being sold only as a way of getting people to stop smoking, I'd be far less critical. But I think that they're being sold as something very different ... and I still find that to be offensive.




Finally, I got the following email from MNB reader Brian Blank:

So…Jet and Bed Bath & Beyond….
 
I love the blue card.  I don’t really need home things all that often, but I’m glad BB&B  is there when I do.  We hoard the blue cards when they come, and I have even taken to keeping a stash in my car “just in case”.  So maybe I cherry pick, but also let me put it this way:  because of the cards, they will often get my money because I’ll go there for something that may have caught my eye in a Kohl’s or Macy’s ad.

As for Jet, if it weren’t for your coverage, I’d have never heard of them until last week when I received both a direct mail advertisement and an FSI in the Sunday paper.   Let me recap that:  the company that fancies itself the 21st century disrupter to Amazon, the Original Disrupter, is making themselves known through junk mail and newspaper inserts.  I don’t know if that qualifies as “irony” or simply “cluelessness”.

I am firmly loyal to Amazon Prime and can’t really see changing that.  (I’d say THAT is the reason Jet dropped the $50 membership buy-in:  the customers who might do that, already subscribe to Prime and have no reason to add another paid membership, especially for a service in its infancy with no proven track record of having everything, and at the right price, as Amazon does.

Published on: October 9, 2015

In the two American League Divisional Series, the Texas Rangers defeated the Toronto Blue Jays 5-3, and the Houston Astros defeated the Kansas City Royals 5-2.

This gives the Rangers and Astros 1-0 leads in the best-of-five series.


And, in Thursday Night Football, the Indianapolis Colts defeated the Houston Texans 27-20.

Published on: October 9, 2015

Once again, I've had a week during which I haven't had time to go to any movies or read any books. But, I do have a couple of wines I'd like to recommend...

First, the 2010 Domaine Serene Yamhill Cuvee Pinot Noir, from Oregon ... which is a terrific pinot, with a perfect amount of mouth-filling body. Just wonderful.

And then, there's the San Jacopo da Vicchiomaggio Chianti Classico, a spectacular Italian wine that is, not surprisingly, perfect with spaghetti, meatballs, and sausages.

Enjoy!

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

Slàinte!