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    Published on: November 3, 2015

    by Michael Sansolo

    In winning the World Series this year, the Kansas City Royals delivered a powerful business and baseball lesson on the importance of fundamentals.

    In the words of the flustered manager in Bull Durham, “This is a simple game. You throw the ball; you hit the ball; you catch the ball."

    The Royals did all that really well and won.

    So in the midst of all the discussion of local products, superfoods and omni-channel retailing, we have to remember the simple realities of this business and how incredibly critical they remain to success or failure.

    The Retail Feedback Group (RFG) is out with a new study of shopper habits that peers through the eyes of consumers and the message couldn’t be clearer: The fundamentals matter.

    In a survey of 1,200 shoppers, RFG finds that most are generally satisfied with the stores where they buy food, rating them at 4.4 on a scale where 5 is the highest. Satisfaction rises even higher among those shoppers who feel they are treated as welcome guests or when staffers are knowledgeable and helpful.

    But the other side is just as important. Nothing depresses satisfaction more than unsanitary conditions - in the store in general and with the shopping carts in particular - or discourteous employees. Not surprisingly, factors such as inaccurate price scans or unpleasant odors (especially in the seafood department) also are high on the list of issues that ruin the shopping experience.

    This should come as a surprise to absolutely no one. But clearly this isn’t the case. It’s hard to believe that a random sample of shoppers would produce those findings if shoppers themselves weren’t still running into those conditions.

    The question is, are they finding those problems at your store?

    For non-retailers the question is only slightly different. What fundamental issues exist for your company and your business and what are you doing on an everyday basis to make sure they aren’t a problem for you?

    The RFG study (you can find the highlights here) offers a wide range of insights beyond the basics of the customer experience, many of which demonstrate the changing complexities of retail beyond the basic. Some of the findings you might want to examine include:

    • Millennials, as you might expect, heavily use technology to interact with their supermarket especially with electronic circulars and on-line shopping lists.

    • Social media impact on shopping continues to grow, but the opportunity for even stronger links remains enormous. Consider that while 83 percent of shoppers use social media, only 31 percent use it to connect to their primary store. Shoppers say social media can have a powerful influence on food choices from restaurants to recipes, so the incentive to utilize this technology is clear.

    • Satisfaction with on-line shopping models also has room for growth, with shoppers still reporting much higher enjoyment of in-store experiences than any of the on-line alternatives.

    • Although the economic recovery remains tepid, shoppers are slowly dropping some of their cost-saving strategies. But don’t move too quickly: low prices and promotions still matter.

    In the end, nothing matters more than the fundamentals. To paraphrase the line from Bull Durham: It takes clean stores, accurate prices and well-trained, helpful employees.

    It’s a simple game.


    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: November 3, 2015

    by Kevin Coupe

    CBS announced yesterday that it will bring back "Star Trek" to television, beginning in January 2017.

    But with a difference. This sixth "Star Trek" TV series (seventh if you count the animated version that came between the original series and "Star Trek: The Next Generation") will not actually air on the network.

    CBS said that the pilot will be seen as a special preview on the traditional broadcast network, but after that all episodes will run on CBS All Access, a streaming video platform that viewers can subscribe to for $5.99 a month.

    This will be the first "Star Trek" series to not appear on traditional television (if you don't count the fan-produced series that can be found online), and the first original series to be cerated specifically for CBS All Access.

    This strikes me as, well, entirely logical.

    If you are a traditional network that wants to test exactly how far you can go with programming produced for non-traditional venues, you might as well do it with a high-profile property with enormous name recognition. "Star Trek" fits the bill perfectly ... I can guarantee you that from the moment the new "Star Trek" series was announced yesterday, millions of fans started checking their calendars and making sure they can stream CBS All Access. If CBS is successful in what is likely one of its goals - attracting a younger audience with a new "Star Trek" program - this could end up being a game changer in an industry that already is going through enormous technological change.

    This is what all businesses have to do these days. In a familiar phrase, they have to boldly go where no one has gone before.

    No word yet on what future era - or timeline - in which the new 'Star Trek" will exist. (I'm hoping that it will happen just after "Star Trek: The Next Generation," and that Capt. Jean-Luc Picard shows up to send the new ship and crew on their way to an all-new five-year mission.)

    I'd like to think that the enormous success of The Martian and the more-than-likely huge business that will be done by the new Star Wars films, as well as the continuing adventures of the rebooted Star Trek movie series, will add up to TV/streaming success for the new "Star Trek" series ... as well as continued new enthusiasm for a national space program, which often has been a wonderful byproduct of "Star Trek."

    Here's one thing I'm pretty sure of. It'll be an Eye-Opener from a business perspective ad hopefully one from a creative point of view.
    KC's View:

    Published on: November 3, 2015

    Seeking Alpha reports that "more than a year after Google disclosed it has launched a delivery drone initiative called Project Wing, Wing chief David Vos states Google aims to begin delivering packages to consumers via drones in 2017."

    It is unknown at this point what kinds of packages will be delivered via drone, or where.

    According to the story, "The Google Express same-day delivery service (delivers goods on behalf of 3rd-party retailers) would be a natural fit for Wing. Amazon, meanwhile is pushing ahead with its Prime Air drone delivery project. Questions still remain about the reliability and safety of large-scale drone delivery (particularly in densely-populated urban areas), as well as battery life and noise."
    KC's View:
    It continues to amaze me how fast this whole drone thing has gotten traction, moving from what appeared to be a whimsical investment by Jeff Bezos to something that has serious implications for logistics-oriented companies. Appearances, apparently, were deceiving.

    That said, there are still lots of issues that almost certainly have to be resolved before we see delivery drones whizzing around the sky ... not least of which are the regulatory and security questions that will be examined by the Federal aviation Administration (FAA) and the Department of Homeland Security. But it seems to be more a matter of "when" these issues get resolved, not "if."

    Published on: November 3, 2015

    The Cincinnati Business Courier reports that Kroger is unveiling new digital options in the Cincinnati market, "adding its Scan Bag Go technology to 15 stores in the area this week. The system allows customers to check out items with a handheld scanner in store aisles as they shop ... The scanners have been designed to function with other digital products Kroger is creating, including its digital shelf technology that allows shoppers to play videos and view special offers. In the future, the scanners could be used to show discounts as shoppers pass by products in the store."

    The story notes that "Kroger said it has more than 17 million digital accounts and more than 20 percent of its customers are using digital tools in some of its markets. It has found that shoppers who use the scanning technology along with other digital services, including its growing ClickList online ordering system, are very loyal and typically come into stores more often."
    KC's View:
    The thing about Kroger is that it is very good at accumulating data and then acting on it ... and so I'm working on the assumption that this is exactly it will do with these digital initiatives. Then, as it integrates that information into the data being compiled via its new and expanding e-commerce programs, Kroger will have something of real and enduring power that will give it an enormous advantage.

    Published on: November 3, 2015

    The Albany Business Review has an interview with Scott Grimmett, the COO of Golub Corp. since 2012, who spent 40 years at Safeway and now has been working with the company to transition from the Price Chopper format to the Market 32 concept.

    Grimmett tells the Review that when he first saw the company, "The primary thing I saw wasn’t a broken business. What I saw was a changing competitive landscape in the Northeast. If you go back 20 years, a lot of small, regional players would just fight it out every day. By the time I got there, small regional players [such as Grand Union and P&C] were gone. What I also saw was not just strong regional players, but many were members of multi-regional chains who have much deeper pockets, much lower expense ratios, and can compete very hard. If you follow the business, you understand the biggest pressure point is with conventional grocers. They have been shrinking over the past 30, 40 years. They are pressured on two sides: the niche players, and the heavy discounters."

    It was Grimmett's first impression of Price Chopper, he says, that "the brand on the front of the building wasn’t necessarily being fulfilled within the store. When you think of Price Chopper, you think of extreme, no-frills discount. In our stores, we’re highly promotional. We offer great deals, but we’re also doing pizzas, pharmacies, all kinds of stuff. We were a little disconnected."

    There are three Market 32 stores open to date, and the company continues to gauge reactions. "It’s really very early still," he says. "To be candid, there are still things not done in the stores. The feedback has been positive. We’re going to do a tremendous post-analysis, which is coming up. We want to be careful about jumping off a bridge with any new or different direction until the customer has a chance to get used to it a bit."
    KC's View:
    Grimmett's assessment strikes me as being a pretty fair one. I think that when the Market 32 initiative was announced, there were some legitimate questions asked about whether the Golubs were writing off a high level of brand equity that they have nurtured and grown for years. But I also think that it is important to recognize when the world is changing, and make sure that you have your eyes on the future, not the past. That's what I think that the Golubs are doing ... and whatever the risks, I applaud them for that.

    Published on: November 3, 2015

    The Seattle Times this morning reports that Amazon has upgraded its maternal leave policy to "up to 20 weeks of paid leave for new birth mothers, joining a growing number of tech companies expanding benefits to retain hard-to-find technical talent ... Under the policy, new parents of either gender who have worked at Amazon for at least a year will get six weeks of paid leave. That applies to birth parents and parents who adopt children.

    "Added to the 10 weeks birth moms are offered, plus four weeks of medical leave some moms qualify for, some of those mothers now have up to 20 weeks of paid time off."

    In addition, the story says, "Amazon also introduced a 'leave share program' that allows employees to gift all or part of the six-week leave to a spouse or partner who does not have paid parental leave through his or her own work. That means the Amazon employee would come back to work, and his or her partner could get paid by Amazon to stay home and care for the child."

    Not only is this program designed to make Amazon competitive with other tech companies that are boosting their benefits to attract and retain talent, but it also addresses - even if only indirectly - charges level at the company by a recent New York Times story that Amazon can be a "brutal" place to work, with a sometimes dysfunctional corporate culture in which there was little concern for work-life balance.

    The Seattle Times also reports that Amazon today is scheduled to open a brick-and-mortar retail store there, in the University Village shopping area. "The store, called Amazon Books, looks a lot like bookstores that populate malls across the country. Its wood shelves are stocked with 5,000 to 6,000 titles, best-sellers as well as Amazon.com customer favorites."

    According to the story, "Amazon is betting that the troves of data it generates from shopping patterns on its website will give it advantages in its retail location that other bookstores can’t match. It will use data to pick titles that will most appeal to Seattle shoppers.

    "And that could also solve the business problem that has long plagued other bookstores, unsold books that gather dust on shelves and get sent back to publishers. More than most book retailers, Amazon has deep insight into customer buying habits and can stock its store with the titles most likely to move."
    KC's View:
    The leave policies decision reflects a larger reality, which is that Amazon has to compete for good people. You can't create an ecosystem without a great infrastructure, and the more ambitious Amazon gets in this regard, the better it is going to have to treat its people; they simply won't be as replaceable as in the past.

    As for the physical store ... I think this probably is more of an interesting experiment rather than a harbinger of things to come. But that's just a semi-educated guess.

    Published on: November 3, 2015

    Tech Times reports that Amazon has announced that Prime Now customers who order "Call of Duty: Black Ops 3" will get it delivered "to their doors at midnight EST on Nov. 6 in 20 select cities. On top of that, as part of the special service, Amazon won't be charging any delivery fees in a two-hour window time."
    KC's View:
    t is all about ecosystem ... and about creating the path of least resistance between retailer and shopper. When Amazon can do this, it should ... and will. The competition will be left to figure how to compete.

    Published on: November 3, 2015

    • The Associated Press reports that Walgreens Boots Alliance is saying that it is willing to divest as many as 1,000 stores to gain regulatory approval of its acquisition of Rite Aid, though it anticipates that it won;t have to sell more than 500.

    According to the story, the company "told investors Monday the deal will boost its presence in the Northeast and Southern California. It added that its greater size will let it enjoy economies of scale and greater efficiencies. The company estimated that savings derived from the merger would top $1 billion, with benefits adding up a few years after the deal closes."


    • The Wall Street Journal reports that as retailers face a "shrinking pool of workers" for the upcoming end-of-year holiday shopping season, they are looking for ways to make themselves preferred employers.

    For example, "Toys R Us Inc. is giving part-time employees the chance to double their hours compared with a year ago," the story says. "Macy’s Inc. is looking to turn more part-time jobs into full-time positions and Target Corp. is offering holiday workers more money for the busiest shifts."


    • TreeHouse Foods announced today that it has signed a definitive agreement to acquire ConAgra Foods’ private brands operations. Annual sales of the combined entity will be nearly $7 billion. The transaction is valued at $2.7 billion, and closing is anticipated in the first quarter of 2016.
    KC's View:

    Published on: November 3, 2015

    • Whole Foods announced yesterday that it has hired Don J. Clark, who has held multiple executive positions at Target Corp., to be its new global vice president of purchasing for non-perishables.


    • The Wall Street Journal reports that Fresh & Easy Neighborhood Markets has hired Amir Agam of FTI Consulting Inc. to be its chief restructuring officer as the company winds down operations and closes all of its stores in California, Arizona and Nevada.
    KC's View:

    Published on: November 3, 2015

    We had a story yesterday about how Kmart plans to revive its "Bluelight Special" promotions, which I thought seemed completely in character - a company nearly completely irrelevant now plans to build sales by using a tool invented back in the sixties.

    MNB user Tom Murphy responded:

    What!  Kmart still has stores and people still shop there?

    MNB reader Jim Caperton wrote:

    If my grandmother and aunt were still alive they would like it. If I remember correctly , you had to go to the store to get the blue light special. I think that is the issue today.

    Exactly right on both counts.

    MNB reader Jim DeJohn wrote:

    I’d like to add to the discussion about Kmart bringing the “Blue Light Specials” back – they still need to get customers in the store!  A blue light special to an empty store is not going to work.  It’s been years since I’ve entered a Kmart…if I ever do again.

    And, from another reader:

    So let me get the visual on this straight: 

    One of the four employees in the store goes to the back room and rolls out a cart with a 1970’s blue flashing police light affixed to a 10ft tall chrome pole which is attached to a car battery housed within the cart.  At the direction of the “manager on duty”, they flip the switch on the blue light pole and make a PA announcement that for the next 15 minutes,  Bic ball point pens are now 10% off during the blue light special.  When this happens all three store patrons come running across the store to investigate this tremendous offer.  I’m intrigued, however should it fail then perhaps give S&H Green Stamps a try. (Sarcasm intended.)


    That would be about it.

    And from yet another reader:

    I’m glad they’re finally bringing back the blue light special. Now I can shop at Kmart again….If I can find one.

    I think we've pretty much summed up the Kmart problem here.




    We had a piece the other day about how a judge's decision essentially allows even the biggest brewers to call their products "craft beers" because there is no legally binding definition of what that term means.

    MNB user Rich Heiland responded:

    I now shop for beer with my smart phone. Faced with a line-up that looks decidedly "craft" I google labels, addresses, whatever key words I can. As soon as "brand of" or "subsidiary of" etc pop up, I move on. I realize that in some cases there corporate "craft" beers are good beers but a part of why I purchase craft beers is to support the smaller concerns that have created them. After years of being well behind the curve because of prohibitive laws around distribution Texas now is starting to have a lot of regional and local beers. I want to support them and I don't want to be fooled.

    I still thing that this will end up being self-regulating, and that big companies that try to fool the consumer will pay the ultimate price - lack of trust and a diminished relevance.




    Still getting emails about REI's decision to close on Black Friday and pay its people to go hiking.

    MNB reader Jule S. Andrews wrote:

    I also have major kudos for REI and what they are doing with Black Friday.  In recognition that this is a major PR opportunity, I hope REI is taking it a few steps further.  I wonder if they have in-store staff engagement around it, such as “come back to work with selfies of your day outdoors,” and then use that for further public marketing on the good effects of being closed.  This could pay big dividends, in many ways.

    Excellent idea. Consider it passed along to the folks at REI.




    On another subject that gets addressed almost daily here, MNB reader Sue DeRemer wrote:

    IMHO Walmart will always have difficulty competing with Amazon, due to Amazon’s technical strengths.  However, here’s a possible opportunity for Walmart that cannot be duplicated by Amazon:

    Most WalMart customers live in communities that are under-served in high-speed internet connections.  Some possibilities: Develop and sell high-speed internet service ... Start in-store internet cafés with high-speed connections ... Provide other services that are lacking in rural communities (Library?  Community center?).

    Getting more people in the door would do much more for their recent softness than drones will.


    Again, excellent ideas. Consider them passed along to the folks at Walmart.




    Responding to a story last week about Amazon's expanding ecosystem, one MNB user wrote:

    The future is not banner ads.  We’ll trade our privacy for entertainment.  Sellers want to know what we “Like”; want, need, where we are in geo-codes and where we are in our heads.

    Sellers will evolve, resembling the IBM “Watson” computer, always anticipating needs, wants, and desires.  The best Sellers will have services and products appear at the right place and exactly the right time.  Today’s Amazon “dash”, now thought of as innovative, will be disintermediated, made obsolete.
     
    New socks delivered just as the old socks have first holes.  New belts, shoes, air freshener, laundry detergent will all be in supply … just in time.  New tires will be scheduled on your calendar at “sale” prices (personalized pricing, of course).  Oh, the tire guys are not the sales agent … it’s Google or Facebook constantly making these decisions for you.
     
    Banner ads; I think not.  Too much friction in the process.  Too much uncertainty relying on the consumer to make decisions.
     
    Trade your privacy for convenience, entertainment and savings.   By the time you notice a banner ad the competitive product will already be in the pantry, at your door, or on your calendar.
     
    Today IBM Watson is too expensive for service to individuals.  Computing power doubles every 18-months.  As soon as 4 cycles computing power will 2*2*2*2 = 16x more powerful.  5G mobile data will be 2x faster than home broadband.   Watson will be a personal assistant and likely control half of US consumer spending ($12T, I believe) … $6T via new Watson services. 
     
    This will scale quickly.  Its not out of the realm of possibility that, in our lifetime, we see our first $ trillion business agent.





    On the subject of McDonald's sending representatives into schools to talk about nutrition issues, one MNB user wrote:

    Are you kidding?  This is one of the worst cases of exploiting children for the purpose of building corporate profits.  Where are the parents?  I'm  enraged just thinking about it.

    Me, too.




    From another reader, on another subject:

    For the meat industry to continue to deny any cancer connection is as foolish as the sugar growers telling us to eat as much as we want, it's  ok.  When red meat consumption is done in moderation, it can be part of a healthy diet.  But obviously, that statement scares the industry.  Too bad, they lose all credibility.




    The Haggen situation continues to generate email, like this one from a reader:

    I could not agree more with your assessment of the Haggen debacle, I couldn’t sleep at night destroying the lives of so many.  Frankly, I am conservative by nature, but believe this is a classic example of the law being on the side of the wealthy.   I do not want to suggest government micromanagement, but the front line workers are the victims and the private equity firm will make millions of dollars, which is their definition of success.  Meanwhile, communities will suffer due to loss of stores and jobs, higher unemployment, reduced tax base, etc. 
     
    Sad, but true in our industry and it  won’t stop.





    Got the following email about my obit and comments regarding Fred Thompson yesterday:

    Kevin, I don’t quite understand what benefit or agenda you have by trolling a guy who just passed away.  Seems totally uncalled for.  I believe that section is called Rest In Peace, not Troll The Dead.  Stay classy, dude.

    I wasn't trying to be disrespectful or provoke a response ... I was just trying to offer an honest assessment of his career in as few lines as possible. Apologies if I offended anyone, but that certainly wasn't my intent.




    Finally, I want to thank all the folks who sent me email commiserating about the fact that the Mets lost the World Series to the KansasCity Royals.

    To be honest, this loss didn't sting all that much. Perhaps it was because the Royals clearly were the better team, and maybe it was because the Mets gave their fans a ride we never expected. I got to watch them play baseball on November 1 ... and lately, they've been playing meaningless games in early September.

    Besides, it is important to keep all this stuff in context. Things happen in life that are of a lot more import than a baseball game ... and, as the great Robert B. Parker once said, "baseball is the most important thing that doesn't matter."

    And ... pitchers and catchers report in about 15 weeks.

    More upsetting to me than the way the Series ended was what I would argue was the complete incompetence of the Fox Sports broadcast crew ... I think Joe Buck is way overrated as a play-by-play guy, and Harold Reynolds ought to never be allowed to do color commentary on a game ever again. Their comments tended to range from the insipid to the inane, and rarely were anything closed to inspired. At one point, they actually compared Yoenis Cespedes to Willie Mays ... and while I'm grateful to Cespedes for everything he brought to the Mets this season, to compare him to one of the greatest players ever to don a uniform borders on sacrilegious.
    KC's View:

    Published on: November 3, 2015

    In Monday Night Football action, the Carolina Panthers defeated the Indianapolis Colts 29-26.
    KC's View: