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    Published on: October 20, 2015

    by Michael Sansolo

    Survival in business relies on a simple Darwinian principle: it’s not about being the biggest or strongest, but rather the one most able to adapt to changing situations. That’s why the dinosaurs are gone, yet horseshoe crabs and Gingko trees keep going.

    Adaptability is a reality every business needs to consider at a time when economic, competitive, technological and demographic conditions are changing virtually everything around you.

    There is a great lesson in that very principle developing across the US in possibly the most surprising place of all: the Veterans of Foreign Wars (VFW).

    In recent years the VFW and the American Legion both have been facing existential threats despite the ever-growing number of young veterans from the continued conflicts in Afghanistan and Iraq. In the past decade, the 116-year-old VFW lost nearly 500,000 or one-third of its members sadly due to the death of many World War II and Korean vets. The American Legion lost nearly a million members.

    But a front-page article in this Sunday’s New York Times detailed the very new path the VFW is successfully taking to reverse those losses and become more relevant to the new generation of veterans. It’s an amazing story about adapting to new times and new needs, in part by changing ways and in part by a return to basics.

    Some of the changes made by the VFW are simply in the activities featured at the posts across the country. The Times visited a post in Denver where yoga is offered on Tuesdays, meditation on Wednesdays and photography on Fridays.

    Other changes are in style. No longer are members all wearing the traditional VFW hats. Rather there are many baseball caps - worn backwards, of course. What’s more, the posts are now more family friendly and put a heavy emphasis on healing post-war wounds and psyches more than simply creating a meeting place for inexpensive drinks.

    Even the VFW charter itself has been changed, replacing the word “men” with “veterans.”

    In many ways the VFW’s changes are bringing the organization back to its roots. As the Times pointed out, the mission a century ago was to lobby the government to stop spending lavishly on war memorials and to give better care to troops with psychological injuries. The VFW and American Legion succeeded on countless fronts in doing just that since World War I.

    And now, an organization founded by veterans of the Spanish-American War is rebuilding its numbers and importance.

    Accompanying the Times article were pictures of the new community of vets that beautifully represented the diversity the VFW serves today. Along side a 92-year-old WWII vet were pictured two women, one with many visible tattoos, a Vietnam-era vet with long flowing hair and vets of Iraq, Kosovo and the 1991 Gulf War.

    In many ways the challenges faced by the VFW or Legion translate directly to many existing businesses that grew to success in cities, towns and neighborhoods that are very different today. The basic shopper needs have evolved as have the shoppers themselves. The companies that succeed best are the ones that change with them.

    It’s the basics of relevance and survival.


    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.
    KC's View:

    Published on: October 20, 2015

    by Kevin Coupe

    Here's a measure of how the food consuming public has changed.

    OpenTable, the online restaurant reservation company, says that "reservations for parties of one have grown nationally by 62 percent, making them the fastest growing table party size."

    The study suggests "that the stigma surrounding dining solo may be starting to lift and that consumers are eager to savor unique culinary experiences alone," and notes that restaurants have become far more welcoming to such customers, offering communal and counter seating that go beyond the old "can I order at the bar" paradigm.

    While this in some ways isn't surprising to me - I've been eating on my own at restaurants for 30 years and often have taken advantage of my travels to try unique places that I might ordinarily not have access to - I do think that it reflects a broader demographic as well as attitudinal change. It isn't just single dining that has lost its stigma ... it is being single in general, as people wait longer to get married if at all. We also know that the whole notion of "traditional households" has changed. Stigmas are falling all over the place, and opportunities are being created.

    These are shifts that food retailers have to not just compensate for, but need to embrace. With Eyes Open.
    KC's View:

    Published on: October 20, 2015

    The Seattle Times reports that Amazon is doing battle with the New York Times over an article that accused it of mistreating and abusing employees.

    Jay Carney, the former Obama administration press secretary turned Amazon senior vice president for global corporate affairs, posted a long essay on the website Medium accusing Times reporters "of willfully ignoring context when it came to quoting the company’s accusers."

    The main complaint was that an employee quoted in the original article as saying that "nearly every person I worked with, I saw cry at their desk," in fact was an employee who "had attempted to defraud vendors and conceal it by falsifying business records," and had resigned from Amazon under pressure.

    Times Executive Editor Dean Baquet has posted his own long essay on Medium, disputing the claims and, especially, saying that the employee in question disagreed with Amazon's characterization of his departure.

    Carney also said that he only posted the original essay on Medium because he'd brought the various issues to the attention of Times editors several weeks ago, but had not gotten a response. So he went public with his arguments.
    KC's View:
    Tough week for the Times. First, it finds out that a federal investigation seems to have some significant problems with its article accusing Walmart of bribing Mexican officials to ease its growth path there, and now Amazon comes after it with guns blazing over the workplace abuse article.

    I can't say authoritatively who is right in each of these cases. I have no idea. My bet would be that everybody has some truth and accuracy on their side, but that there also can be holes to be found in each position.

    But here's what I can say authoritatively. We don't live in a world where people and companies are simply going to take it on the chin when accused of such things. They are going to fight back. They have to fight back. The media - and this is how it should be - is going to be more accountable for the stories that it publishes and the positions that it takes.

    There's also an extension of this basic fact ... which is that every institution of authority (governmental, medical, legal, commercial, religious) can and will be challenged. There is no such thing as unquestionable authority ... and institutions that used to hold such roles had better get used to it.

    I always think of what Humphrey Bogart's Rick Blaine says in Casablanca when Major Strasser asks him his nationality: "I'm a drunkard," he says ... which is his way of expressing disdain for both nations and political philosophies. He wants to believe, as we know, but he's been let down too often ... which is sort of the way many of us feel these days.

    Published on: October 20, 2015

    Fortune has a story about how the top 25 U.S. food and beverage companies in the last five years have lost $18 billion worth of market share ... largely driven by millennials who have a greater desire for transparency about the foods they eat and the companies they patronize, and small companies that are using their ability and desire to be more nimble and transparent to attract consumer dollars.

    Lifeway Foods CEO Julie Smolyansky told a recent session at the Fortune Most Powerful Women summit that because consumers are shopping with their smartphones and have a wealth of information available about the food they buy, "they can now make smarter choices on the spot.” And, she said, "Consumers look to us to innovate ... We can make changes really, really fast. Retailers are coming to us asking, ‘What’s going to be the next big thing in food?’”

    It is a recognition of this "shifting center of gravity" that has led Campbell Soup president/CEO Denise Morrison to not only work to be more transparent about the company's portfolio of products, but also try to develop a new cultural model: "“At Campbell’s, we talk about being the biggest small company," she said.

    And, when Campbell's has acquired smaller companies for their products and innovative cultures, it has meant that it "kept all the founders at the four companies we acquired because they brought us great adrenaline.”
    KC's View:
    I really like Morrison's "shifting center of gravity" metaphor, mostly because it lends itself to a natural extension ... that companies have to become more weightless, and not be bogged down by legacy issues, by sacred cows that inhibit innovation, and by expectations that they'll do business a certain way because that how it's always been done.

    This is true in every industry, and within virtually every company. If you don't, you become vulnerable to disruptive competition .... and finally, to obsolescence and irrelevance.

    Go weightless or go home.

    (By the way ... think of this in the context of this morning's Eye-Opener ... and how companies have to be nimble enough to cater to all those folks who are having dinner alone in restaurants.)

    Published on: October 20, 2015

    Forbes reports that ride-hailing service Uber "is upgrading its experimental courier service UberRush into a full business, bringing it to New York City, San Francisco and Chicago, and — most importantly — targeting local businesses as its primary shippers, the company said Thursday. The move puts Uber squarely in competition with a growing group of players trying to own on-demand delivery, from third-party delivery partners like Postmates, Deliv and Sidecar to new ventures from major players like Amazon Flex."

    The story notes that Uber "spent months building a product specifically for merchants, one that allows them to process delivery orders and manage multiple deliveries at once. Sellers can manually enter delivery orders that come in online, over the phone or through platforms like GrubHub into a desktop web client. UberRush also integrates directly with tools like point-of-sale system Clover and e-commerce platform Shopify that merchants already use. Once a delivery is on its way, the customer gets a text with a link that lets them track the delivery in real time."

    Delivery fees depend on distance, and have averaged $5; it is up to merchants whether they want to pass it on to consumers. Uber executives tell Forbes that the service is delivering thousands of orders on a daily basis in New York City, but that it is too early to determine how long it will take to get traction in new markets.
    KC's View:
    There is a "let's put on a show" quality to Uber's business model that intrigues me ... it seems like they are willing to try pretty much anything that will disrupt existing business models and solve what they see as specific consumer and business problems.

    Think about what stuff like this does to the US Postal Service or FedEx or UPS, which used to get some percentage of this delivery business. Think about what it does to consumer expectations, and how it will impact businesses that don't offer fast delivery services.

    In the words of Denise Morrison ... the gravity is shifting.

    Go weightless or go home.

    Published on: October 20, 2015

    Reuters reports that manufacturers, already complaining of being "squeezed" by Walmart for price cuts and cost sharing, "are bracing for the pressure to ratchet up even more after a shock earnings warning from the retailer last week."

    The story notes that while Walmart has a long-held reputation for demanding lower and lower prices from vendors, concerns about an expected three years of stagnant profits has forced it to ratchet up the pressure to an even greater degree.

    The discount store behemoth has always had a reputation for demanding lower prices from vendors but Reuters has learned from interviews with suppliers and consultants, as well as reviewing some contracts, that even by its standards Wal-Mart has been turning up the heat on them this year.

    The story says that vendors are concerned that dealing with Walmart will begin to resemble dealing with its even harder-to-deal-with sibling Sam's Club. Earlier this year at Sam's, "unlike in prior talks, which featured give and take, vendors were told they could not ask questions at the meetings, with queries to be handled later via email, according to suppliers and consultants involved in or briefed on the meetings."

    Wal-Mart spokeswoman Deisha Barnett tells Reuters that the company "will work with every supplier to ensure that terms and agreements are mutually agreed upon."
    KC's View:
    Mutually agreed upon. Which I think probably means that Walmart will avoid waterboarding suppliers. For the most part.

    Walmart has a lot of power with the suppliers that sell massive amounts of merchandise in its stores. Which amplifies its powers of persuasion. But I have to wonder if there are lines not to be crossed, that could so poison the well that its supplier relationships might not recover.

    Walmart currently is in a position where it has to invest a lot of money in creating a relevant 21st century retailing infrastructure ... and that means the next few years may be very tough. I think it has to be at least a little careful about how much it tries to cushion the experience on the backs of suppliers. At some point, that could come back to haunt it.

    Published on: October 20, 2015

    The Seattle Times reports that a Delaware court overseeing the Haggen bankruptcy has approved the company's "plan to auction off the bulk of its stores in early November." The planned auction date is November 9.

    Haggen already has said it plans to sell three dozen stores to Gelson's and Smart & Final "in two so-called 'stalking horse' deals, designed to set a baseline price for the auction."

    While the plan has drawn objections from the United Food and Commercial Workers (UFCW) because Smart & Final is not a union shop, the judge said that there had been “good and sufficient notice” and that the stalking horse deals are the “highest or best offer” that Haggen could get.
    KC's View:

    Published on: October 20, 2015

    Amazon announced that it is suing more than 1,000 people who it accuses of posting false product reviews on its site, saying that they are misleading Amazon customers by violating its terms of service and breaking Washington State's consumer protection laws.

    According to the CNN story, "The lawsuit targets account holders on Fiverr.com, a marketplace for odd-jobs where 'gigs' are sold for $5 and up. Amazon doesn't know who is behind the accounts so lists them all as 'John Doe' in the suit.

    "Amazon sued several websites in April for selling false reviews. It said most of those sites have been shut down, and it described the new suit against individual reviewers as the next step."

    Fiverr.com has denied any culpability for the allegedly fraudulent reviews.
    KC's View:
    Customer reviews are one of the great innovations that Amazon has brought to the e-commerce environment ... and I think that in cases of mass fraud, it absolutely must defend the integrity of the system it has established.

    Published on: October 20, 2015

    The Portland Business Journal reports that New Seasons Markets has announced plans for two new stores in California, "a 30,000-square-foot Silicon Valley store in Sunnyvale, Calif., in late 2016 or early 2017 and a 35,000-square-foot Bay Area location in Emeryville in 2017."

    New Seasons currently operates 17 stores n Oregon, Washington and California, and the story notes that "New Seasons opened its first California store in San Jose earlier this year. That store was a rebrand of a New Leaf Community Markets grocery store, an eight-store company that New Seasons purchased in November 2013. The company also plans to open its latest Portland store on Southeast Woodstock Boulevard on Oct. 21, and its first Seattle area store should open later this fall as well."

    “We plan to add one to two stores annually in each state we serve, partnering with farmers and producers to build long-term relationships and bring our customers the best in the region,” says Wendy Collie, New Seasons' president/CEO, in a prepared statement.
    KC's View:
    New Seasons is one of my favorite retailers, and not just because it comes from my soon-to-be adopted hometown. I've always liked the stores' local focus, and I think there are a lot of smart people working there; I had a chance to see the company's newest store that opened in Portland last summer, and I thought it was a definite winner.

    In the past, I've expressed just a wee bit of concern about New Seasons' ability to scale up fast enough and effectively enough to support this kind of growth without losing its edge in existing units. But I do know that they've brought in good people from much larger chains who know how to expand, and Collie herself is a Starbucks veteran ... while she doesn't have to put a New Seasons on every corner, she does know how to scale up an operation both efficiently and effectively.

    So, this will be an expansion that I will watch with great interest. Unlike actual Portland natives, I don;t really have a problem with local companies that make good and expand outside the home market ... though, to be clear, that may be an issue to some longtime and core customers.

    Published on: October 20, 2015

    City AM in the UK reports that "Tesco has filed a trademark for the name Tesco Now," leading to speculation that the retailer intends to launch a one-hour delivery service there.

    According to the story, the move follows Amazon's rollout of its similar Prime Now service there.

    Tesco has not confirmed that it intends to launch a one-hour delivery service, saying instead that it trademarks a number of names and concepts.


    • The National Retail Federation (NRF) is out with holiday projections, saying that average spending per person is expected to reach $805.65, comparable with spending last year ($802.45); that almost half of holiday shopping will be done online, with average consumers saying that 46 percent of their shopping will be done online, up from 44.4 percent last year; that 21.4 percent of smartphone owners will use their device to purchase holiday merchandise this year, the highest seen since NRF first asked in 2011; and that nearly half (46.7%) said free shipping/shipping promotions are important factors in their decision on where to shop.


    • The New York Times reports that Procter & Gamble "is teaming up with EDF Renewable Energy to build a wind farm in Texas that it says will power all of its North American plants that manufacture home care and fabric products. Those facilities make some of the company’s best-known household items, including Tide, Febreze and Mr. Clean."

    It is said to be " Procter & Gamble’s biggest foray into wind power, and is the latest in a burst of partnerships between major American corporations and renewable energy companies."


    Time reports that "a consortium of more than 80 American companies including Walmart, Alcoa and Coca-Cola have agreed to a White House-led plan to combat climate change, the Obama administration said Monday, as the president ramps up his climate plan. The companies have signed a pledge to support the landmark Paris climate negotiations set for the end of this year, reduce their emissions and increase low-carbon investments, according to a White House announcement."

    According to the story, "The 81 companies, which also include American Express, Dell, GE, General Mills, McDonald’s, Nike and other household names, employ over 9 million people and have a market capitalization of over $5 trillion. Each company is committing to specific goals, like reducing emissions up to 50%, reducing water usage by as much as 80%, purchasing 100% renewable energy and pursuing zero net deforestation in supply chains, the White House said."
    KC's View:

    Published on: October 20, 2015

    Regarding the importance of strong and invested front line employees in any retail experience, MNB reader Chuck Volley wrote:

    Want proof? Drop into a McDonald’s, a fast food chain that seems to be in decline, and have a problem with your order.  You’ll probably visibly annoy the counter person and be required to return the entire order, even if they only problem was they gave you the wrong order of fries.  Try the same thing at Chic-fil-A, and a cheerful counter person will immediately make it right, with a smile and a simple statement when you thank him: “My pleasure.”

    And another MNB reader chimed in:

    I had a favorite cashier at the grocery store I used to shop (moved out of town so the commute for groceries would be a bit much). I would rather wait in line to have her check out my groceries than go to an open line. She was fast, accurate and friendly. The store she worked at was large and busy, but she made you feel like she always knew you and was glad you shopped at her store. That is what makes a difference.

    Agreed.




    On the subject of the cultural and institutional changes that Walmart CEO Doug McMillon seems to be trying to make, MNB reader Ken Hathaway wrote:

    While I think your view point on Walmart ‘could be a much stronger company’ is the probably the right one, another view is that all companies get too large at some point in their life cycle and start on the downward side eventually.

    Could yesterday’s Walmart ‘bullet’ indicate a more sinister future for the world’s largest retailer? Unless Walmart, or anyone as you have put in many recent articles, sees and tackles the ever changing marketplace, takes chances on ways to reach the public while cutting expenses, it will eventually go the way of others that did not heed that free advice.


    I'm not sure "sinister" is the right word ... unless you think that Walmart is the root of all evil. (I don't.) I do think that if McMillon gets this right, Walmart's future will be considerably brighter than if he doesn't ... and to be clear, I think that what he's trying to engineer here is really, really difficult.




    I was very critical the other day of a clause being inserted in friends-and-family car sales by Chrysler Fiat dealers that prohibits the buyer from suing the company ... which I thought was kind of sleazy and betrayed a lack of confidence in the cars they are selling.

    One MNB reader responded:

    You are spot on in your analysis of the addition of the clause not to sue and use arbitration.  I would encourage you to take a look at almost any contract from the past 5 years—the agreement you have with your bank for checking or savings accounts, your mortgage, your cable and internet provider or the next time you rent a car just to name a few will probably include such language.  You either agree or you don’t do business with the company—there is really no choice.  In addition, the contract will most likely force you to do the arbitration in the state designated by the company, which most likely will force you to travel if you want to attend the hearing.




    Regarding Starbucks' test of a delivery service in New York's Empire State Building, MNB reader Theresa Ruppert wrote:

    I happened to be training in the Empire State Building on the day of this announcement.  I asked my attendees about their thoughts, since I thought there would be overwhelming enthusiasm.  Some of the first thoughts were about whether the coffee would still be hot when it got to them and how the delivery person would navigate security issues.  Could it be delivered to their desks or would it have to be delivered to receptionist?  That option would delay their coffee delivery.  There are currently 2 Starbucks locations in the building.  It is an interesting eye opener for me and I would love to know how the program progresses.

    We'll keep an eye on it.




    MNB took note the other day of a Bloomberg report that 23andMe, which got a lot of attention when it unveiled an at-home DNA testing kit, has "raised $115 million in venture-capital financing as it prepares to introduce a new consumer product and expands its drug-discovery arm."

    My comment:

    I think this is a fascinating story, because the whole notion of DNA testing that will allow people to address genetically predisposed disease states is one that could have enormous impact for the food industry. Diet is one of the ways in which people can work to prevent disease, and if you have some idea of what you;re going to get before you get it, food can be a powerful weapon.

    This is technology that the industry should embrace wholeheartedly. Hell, if I were programming an industry conference, I'd get someone from 23andMe on the agenda as soon as possible ... because this has real implications for how food is sold and consumed.


    MNB reader Bill Kadlec responded:

    Your comment about foods being a powerful tool to combat disease is the most important point you made in this article.

    The biggest medical problems we face today are directly food related. Diabetes, arthritis, high blood pressure, high cholesterol and many associated diseases can be addressed with the right foods. I've seen this in my own health. I've "fixed" all my blood chemistries over the past 4 months just by altering my diet to a lot of fruits and vegetables (as close to all organic as I can). Cholesterol stats went from overall 208 down to 169, LDLs from 139 to 98, HDLs from 48 to 60 (improvement) and trigycerides down from 90 to 50. Friends of mine have been able to overcome fibromyalgia pain and agony almost completely with the same approach.

    The challenge is finding natural, pure, non-man-made ways to get the nutrients we need. My doctor recently told me that, if you take man-made sources of beta carotene, it actually blocks the absorption of other sources of beta carotene. I've found that most of the "natural" supplements found in health food stores also have man-made components plus fillers, binders and the like. Better certainly than not having them but, still not right. The only products I've found that seem to be absolutely natural is from a company call Purium.

    The problem is, such an approach is expensive, especially since our entire food industry would need a complete re-tooling to accomplish it. But, the trend toward this is clear. The public (of which I am a part of) is demanding this direction. But, health problems will persist for quite a while and big business & government need to change their rhetoric in order to accelerate the change.


    And MNB reader Bill Purcell wrote:

    I’m glad you’re doing some VC funding news in MNB!  I thought I’d give you some color on this, in case you didn’t know:

    Big CPG brand & pharma supplier Johnson & Johnson is one of 23andme's biggest and longest standing investors, having led their Series C financing in 2010.

    Their CEO/co-founder, Anne Wojcicki, is the ex-wife of Google’s co-founder, Sergey Brin.  She founded the company when they were together.


    I did know some of that. I've always felt that these kinds of technology-driven solutions to very real consumer problems have enormous potential.
    KC's View:

    Published on: October 20, 2015

    • In Monday Night Football, the Philadelphia Eagles defeated the New York Giants 27-7.

    • And, in game three of the best-of-seven American League Championship Series, the Toronto Blue Jays defeated the Kansas City Royals 11-8. The Royals now have a 2-1 game lead.
    KC's View: