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: November 10, 2015

    by Michael Sansolo

    There are times when the shortest distance to success is a straight line in a completely unexpected direction.

    There were two recent instances of institutions tying new moves to make themselves both current and relevant, especially with the younger generations, and both examples give other businesses plenty to consider.

    Let’s start in Dallas, where 3,000 tickets sold quickly for a concert, where each concert goer spent at least $10 on souvenirs, where many wore costumes and despite what you might initially guess, Taylor Swift wasn’t the draw.

    It was actually for a classical orchestra.

    Here’s the twist: instead of a program of Beethoven, Bach or the like, the concert featured the music of the video game, "The Legend of Zelda," in a four-part symphony.

    The notion of concerts featuring video game music has been around for about 10 years and is growing in popularity, a rare bit of good news for the classical industry. Over the past 20 years, according to CBS News, classical ticket sales are down nearly 30 percent and numerous orchestras have gone out of business.

    “Symphony orchestras have to take a look at what are the audience demands because if they are not serving the audiences then frankly they are not relevant,“ Catherine Cahill, CEO of the Mann Center in Philadelphia, told CBS. She said Zelda and Pokémon concerts have drawn crowds of up to 6,000 fans—nearly double the typical classical performance.

    Cahill has a point. To be relevant you have to appeal to the audience and if you do it right, you might build new fans. Future concerts might mix Super Mario and Mozart, which might get a new audience listening and loving some classic masters. To paraphrase Mary Poppins, a spoonful of video might help the masters go down.

    Just like that, a new generation might discover and fall in love with some old music. As the tone-deaf father of a classical musician, I can attest to that possibility. At first, I attended concerts just to hear my son perform. Now, with some education, I’ve learned to better appreciate and enjoy the entire performance and I’ve learned that classical music is fabulous. (Especially when my son is in the trombone section.)

    The second example of unconventional thinking came in this past Sunday’s New York Times. My paper came with a strange little cardboard box that gave me a chance to absorb the news like never before.

    Paired with an app on my smartphone, the little box (some small assembly was needed) allowed me to have a virtual reality experience tied to a Times story on children displaced by war in their homelands. From my family room in Maryland, I was transported to a cucumber field in Lebanon to watch a young Syrian refugee; to a swamp in Africa with a victim of on-going conflict in South Sudan; and to ride a bicycle alongside a boy in the Ukraine who took me on a tour of his bombed out school. It was simply amazing…until it crashed 10 minutes in. (Okay, nothing is perfect.)

    Here’s the thing: young people aren’t reading newspapers. Yet the Times virtual reality presentation will wow older readers (like me) and get us to show our kids the device. Just as with the video game music, it may help the Times—and newspapers in general—find a new way to be relevant to an audience currently tuning them out.

    Both cases strike me as stunning lessons for businesses, especially food stores that are also struggling with new forms of competition and lack of connection to younger consumers.

    Using popular culture, current fashion and emerging technologies, perhaps they too can find a way of building new relevance, making cooking and shopping both cool and exciting. We know people want to eat healthier, desire new tastes and understand the economics of cooking at home. Maybe there is a way to make it all happen for a new generation.

    New solutions for a new day and just like I saw on virtual reality: it’s all around.


    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 10, 2015

    by Kevin Coupe

    The Wall Street Journal this morning has a story that brought a tear to my eye ... about the declining fortunes of the manual transmission, better know as "the stick."

    The Journal writes that "the proportion of cars and light trucks in the U.S. sold with manual transmissions has fallen to around 7% in 2014 from 35% in 1980, according to WardsAuto, which keeps data on car manufacturing and sales.

    "The decline is expected to accelerate as high-performance sports cars, once holdouts, increasingly shift to hybrid automatics.

    "While some young buyers still crave the clutch, most are disinclined to manually shift gears, according to Clay Voorhees, an associate professor at Michigan State University, who studies the attitude of millennials toward cars. 'The high of getting the Facebook update outweighs the emotional high of experiencing the G-forces of going around a corner,' Mr. Voorhees said. In other words, he explained, 'Driving a manual is going to make you less able to text or check your phone'."

    Of course, one could argue that if a manual transmission stops people from texting while driving, it would make sense to get rid of automatic transmissions. But that's probably not going to happen.

    I will tell you this. I've known how to drive a stick since college, when a girlfriend decided I needed to learn and told me to take out her Volkswagen Beetle and not to come back until I knew how to work a clutch. (That may have been a euphemism for something else, but this probably isn't the place to discuss that...)

    When I first met Mrs. Content Guy, I was driving an aging Triumph Spitfire ... and I taught her how to drive stick on it. (It was part of the courtship ... not exactly like the football quiz in Diner, but you get the idea.)

    While our family car is an automatic, I've also had cars with manual transmissions since I turned 40 - two Miatas, and now a Mustang. And I will tell you that I wouldn't trade the experience of driving stick for anything. One of the things it does is keep us in touch with how things actually work ... and that's never a bad thing. (And the business lesson from this particular Eye-Opener...)

    I'm in favor of progress. I embrace technology. But as Albert Finney's character says in Skyfall, "Sometimes, the old ways are the best."
    KC's View:

    Published on: November 10, 2015

    The Seattle Times reports that Albertsons is bidding on 36 stores that it sold to Haggen earlier this year, and that now are being divested by bankrupt Haggen after it could not make them work.

    Albertsons sold 146 stores to Haggen when the Federal Trade Commission (FCC) said that such a sale was necessary to assure continued competition after Albertsons acquired Safeway. But Haggen was plagued by the perception of high prices, me-too stores that offered little or no differentiation, and out-of-stocks that created poor traffic and sales.

    Albertsons is described as the “baseline bidder” for 36 of the 95 stores that Haggen began auctioning off this week.

    According to the story, "A document filed with the bankruptcy court Friday lists a baseline or starting bid for most of the locations to be auctioned. Albertsons is among 40 bidders who qualified to participate, the papers say. Others include Sprouts Farmers Market, a Phoenix-based specialty-grocery chain that is the baseline bidder for four California and Nevada stores, and Smart & Final, which is bidding for four stores beyond the 28 it’s getting in the 'stalking horse' package.

    "Haggen noted that for some locations on which it received no qualified bid, it has set its own baseline bid 'to promote a spirited and robust auction and to expedite the auction'."
    KC's View:
    Figuring out the legalities and regulatory issues here is way above my pay grade. Just thinking about it, I'd have to guess that Albertsons figures it has an excellent shot at getting these stores, or it wouldn't bid on them. And if it can get the stores, does that mean it didn't really have to divest them for competitive reasons? So does that mean that Albertsons sold the stores to Haggen to sweeten a deal that it knew probably wouldn't work out in the end, figuring that it could buy the stores back for less money at some point?

    Or is this too Machiavellian a way to look at all this?

    Published on: November 10, 2015

    The Washington Post this morning has a story about how Target appears to have turned the corner in making at least some of its stores more relevant to the modern shopper, including millennials.

    Here's how the Post frames the story:

    "At the new Target store in Rosslyn, there’s evidence everywhere of the big-box chain’s efforts to make itself relevant again.

    "There’s plenty of cycling gear — helmets, seat covers, tire pumps, reflective shirts — because Target has micro-tailored the selection for this Arlington, Va., neighborhood, which its research found is heavy on bike commuters. A display near the entryway is stocked with the trail mix and freeze-dried fruit that store executives think health-conscious urbanites will want to snack on. And the first thing you see when you walk in is a pickup counter for e-commerce orders, because the retailer is betting that apartment dwellers might like this option better than having a package left on their doorstep.

    "Target — the nation’s sixth-largest retailer, with $73 billion in sales last year — has different-looking stores today because it is a vastly different company than it was just over a year ago, when it reeled from a slew of problems ... Target is trying to make a fresh case that a vast fleet of 1,800 bricks-and-mortar outposts is actually an advantage even as the explosive growth of mobile Web use is reshaping the way people shop.

    "So the chain, where some 30 million customers go shopping every week, is moving to spiff up its stores and turn them into pickup hubs and distribution centers for online orders. And under a new chief executive, Brian Cornell, Target is looking beyond its core customer base of suburban baby-boomer moms to appeal to millennial moms and dads, urban dwellers, and the growing Hispanic population."

    Among the things that Target is trying to do is use technology to deliver more targeted offers to consumers even as it creates stores with even more of a local focus; and turn the store experience into something that is inspirational and aspirational, rather than a chore.

    Here's how CEO Brian Cornell puts it: “It’s easy just to follow your competition. It’s really, for us, more important to make sure we’re differentiating ourselves.”
    KC's View:
    I have no idea if Target has turned any corners, but common sense suggests that the moves described by the Post are the right ones if it is going to have a chance at creating a sustainable long-term business model.

    Published on: November 10, 2015

    Business Insider has a story about the high-tech updates that Kroger is making in its stores, beyond the expansion into e-grocery/click-and-collect services that it has been driving of late.

    Among those updates: "In 2012, Kroger rolled out QueVision, a technology platform that uses sensors and predictive analytics to feed managers real-time data — the first and currently only system of its kind in the US.

    "By granting managers knowledge of how many customers are in the store at any second in time, QueVision gives them real-time knowledge of when long lines will happen and where cashiers are needed before a pileup even begins. Data collected over time is fed into the algorithm to provide predictions of exactly what to expect on certain days of the week or month.

    "Before the feature was deployed, average wait time at the store was four minutes. Today, it is less than thirty seconds."

    And, the story says, "QueVision is just the beginning of futuristic tech at the company. At an investor conference in late October, the company reported that 17 million customers have digital accounts with Kroger, with more than 20% of all customers using digital tools in certain markets."
    KC's View:
    These days, it seems to me, among the most important things any retailer can do are a)acquire usable data, and b) use it.

    Seems to me that Kroger has known this for a long time, and is doing a great job at implementing this strategy.

    Published on: November 10, 2015

    Reuters reports that "US fast-food workers are planning a strike today that could affect as many as 270 US cities designed to draw attention to what they feel is a national need for a $15 per hour minimum wage. The strikers are slated to come from such businesses as McDonald’s, Wendy’s, Burger King, and KFC.

    The story notes that the effort is also designed to insert the issue into the US presidential race; there are debates are scheduled for each of the parties this week, including a Republican debate tonight.

    The federal minimum wage is $7.25 per hour, but many communities have minimums that are above that figure.
    KC's View:
    I don't think anybody has to do any work to make wages a part of the political debate. It will, however, take considerable work to change anybody's mind on this issue.

    Published on: November 10, 2015

    The New York Times reports this morning that SeaWorld has decided to phase out the killer whale performance show at its San Diego location, and instead will feature what it calls "an 'informative' experience that has a 'conservation message inspiring people to act'."

    The killer whale shows will continue at its Texas and Florida locations, however.

    The Times notes that "SeaWorld has been under scrutiny since Blackfish, a documentary that criticized the park's treatment of orcas, was released in 2013, and attendance has suffered."

    According to the Times, "The pressure to stop using the orcas as performers has been particularly intense in California. On Friday, Representative Adam Schiff, Democrat of California, said he would introduce a bill in Congress that would prohibit the breeding, wild capture and import or export of the whales. In October, the California Coastal Commission banned the breeding of killer whales in captivity, a decision SeaWorld said was an overreach of the agency’s authority. The commission attached the ban to its approval of a proposed expansion of SeaWorld’s whale habitat in San Diego."

    Joel Manby, the SeaWorld president/CEO, maintains that "we didn’t do anything in San Diego because of the activists. We did it because we’re hearing it from our guests.” And guests, he says, want a more natural experience without tricks and trained whales.
    KC's View:
    Though not, apparently, in Texas and Florida.

    I wrote about Blackfish when it came out, and found it to be very persuasive about the ways in which orcas are abused in the interest of consumer entertainment. Not everyone agrees, of course ... but what I find even less persuasive is the argument that activists and the documentary had no role in this change of policy.

    It might actually make more sense, I think, to concede that the world has changed, that activism often draws our attention to these changes in unexpected ways and with unexpected passion, and that it is the duty of any business to pay attention and, when possible, adjust.

    The same instincts that make people increasingly interested in organic and local food, and in the origin stories about the products and services they buy, also make them more sensitive to issues like the ones illustrated by Blackfish. The broader lesson is that businesses ignore this at their own peril.

    Published on: November 10, 2015

    Fortune reports that "Starbucks isn’t just giving away free coffee for Veterans Day—it’s giving away free college tuition too. The coffee chain announced on Monday that its employees who are current or former members of the U.S. Armed Forces will now have access to an additional free college tuition benefit that they can extend to a spouse or child."

    Starbucks employees already have access to the company's free tuition program, which allows them to get a bachelor's degree online at Arizona State University; more than 4,000 employees are using the program, the company says.

    The story notes that "the expansion of Starbucks’ free tuition benefit comes just a few days after shares took a beating when the company revealed that its higher employee costs—while reducing worker turnover and improving customer service—were eating into profits."
    KC's View:
    Now, if only Starbucks had decided to provide this benefit via a card that said, "Merry Christmas," it probably could've avoided a lot of problems...

    Published on: November 10, 2015

    • Albertsons yesterday announced the completion of a $4.8 million renovation of its Dublin, California, Culinary Kitchens & Technical Center, described as a "state-of-the-art facility that enables the company's stores like Albertsons, Safeway, Jewel-Osco, Vons and Carrs to provide customers with products developed to their tastes. The facility has sophisticated capabilities in culinary development and food technology, with a special focus on fresh selections in our Service Deli, Meat, Seafood, Produce, and Bakery departments. In addition to its staff of 70 culinary specialists, the facility also contains equipment to replicate manufacturing plant, store and home kitchen environments."


    • Target said yesterday that it plans to open its stores at 6 pm on Thanksgiving Day, and also will feature a "10 Days of Deal" promotion that will begin on November 22 and offer category-specific promotions each day.

    Toys R Us said yesterday that it also will open on Thanksgiving, at 5 pm.

    Nordstrom, on the other hand, confirmed that not only will it be closed on Thanksgiving, but it won't put up any Christmas decorations until the day after.

    More retailers than ever are opening on Thanksgiving as a way of getting a jump-start on the Black Friday holiday sales.
    KC's View:

    Published on: November 10, 2015

    Got the following email from MNB reader Brian Carpentier:

    In your mention of Hannaford having one of the best training programs, there is another who recently surfaced again that I do believe you previously mentioned: Rick Anicetti, who has taken over as head of Fresh Markets. It will be interesting to see where the players land in the merger of Hannaford and Stop & Shop here in the northeast in 2016.

    I have very little confidence about this, but I'd suggest that if the merger is concluded, top leadership needs to come from the halls of Hannaford.

    By the way ... there's also Steve Campbell, a former Hannaford guy who is founder and CEO of Pro-Voke, a highly regarded management consulting firm. And Cathy Burns, a former Hannaford exec who is president of the Produce Marketing Association (PMA).

    The list goes on.




    On the subject of the Fresh & Easy debacle, one MNB user wrote:

    I have admired Ron Burkle’s success for years, but frankly, no one in the trade that I know did not predict this almost from the very beginning.

    First, why allow the future namesake of your stores (Wild Oats) to be sold as a quasi-private label at Wal-Mart?  Unless the intention all along was to flip the stores to Wal-Mart… but regardless of whether that brand worked at Wal-Mart or not, it was not a good move for Fresh & Easy.

    I visited the Las Vegas store soon after the remodel.  Inside I wasn’t sure if I was in a 7-11, a Chevron, a neighborhood grocery store, or a Starbuck’s.  Once outside though, with only four cars in the parking lot, I knew I was at F&E.


    From another reader:

    You're right on. I've been in the grocery industry for 40 years in Southern California and I know there are people smarter than me running these companies, but I gave Fresh & Easy five years when they entered the market, there was no rhyme or reason to the site selection and despite all of their research into the So. Cal. market, they did what Tesco wanted to do.   They lasted a little longer than the five years I gave them, not much longer.

    MNB reader Tom Murphy wrote:

    I think your point about “how all these smart people missed it”, is fascinating and brings these considerations: 1) Yucaipa is made up of too many old-timers and white males who have been passed over by the new world of consumer-led retail; 2) there are lots of egos involved here, i.e., “if I can think it, it must be right” (see Haggen, A&P, Pathmark and an increasing growing number of other stories); 3) the cost of entry is cheaper, the ability to attack on the edges (home delivery) and stealth marketing all increase the speed of disruption; and 4) it is never about the deal, it is about the human experience, both consumers and employees.  Unhappy, inefficient or bored employees leads quickly to NO CUSTOMERS.  It is called CHANGE, it is happening faster, behind closed doors and it is harder to see it coming…welcome to today’s retail industry!




    We also got lots of email about the Starbucks Christmas coffee cup controversy.

    MNB user Mike Griswold wrote:

    As they say on talk radio, long time reader, infrequent contributor …
     
    99% of the time I am on the “Team Content Guy” bus, but not completely on this one. In general, I don’t have an issue with the Starbucks cup. While I think the term “war on Christmas” is hyperbole, to think that there is not a concerted effort to eliminate the spirit of the season is a bit naive. And no, I am not playing a “victim” card. In my opinion, we have let a minority (the 30%) of non-Christians dictate policy because they might be “offended”. Have we started “Christmas” too soon, for sure. Would I prefer someone say Merry Christmas of course, do I lose sleep if they say Happy Holidays no. Will I patronize retailers that force associates to use Happy Holidays, absolutely not! In general, we have let a vocal minority dictate policy by playing the “offended” card. If a shopper finds the term Merry Christmas so offensive, than shop somewhere else.
     
    Interested to see how this plays out. I’ll take the over on how many responses this generates.


    From another reader:

    Conservative Christian here…  Much ado about nothing.

    MNB reader Jim Swoboda wrote:

    In reading your story on the Starbucks controversy, I just had the same conversation with my wife as I was drinking my typical Venti Bold Brew of the Week.  Although I do think, contrary to your thought, there have been instances of overly reactive retailers taking “Christmas” out of messaging for fear of whatever, this one simply does not fit that bill.  

    It’s total hogwash!


    From MNB reader Tom Herman:

    We are not overly religious people, but my wife and daughter commented to me about the red cup just yesterday.  To them, it was seen as trying not to offend anyone.  I think when companies try not to offend anyone, they offend just about everyone.  Pretending that Christmas isn’t about Christmas is just silly.  I am not offended by Hanukkah or Kwanzaa, I think it’s kind of cool.  Why would anyone be offended by Christmas?  For what it’s worth, my wife said just put a snowflake, reindeer or wreath on it and no one would have thought twice.

    Nothing puts the "Christ" in "Christmas" like a snowflake, reindeer or a wreath.

    And from another reader:

    Give me a break.  Those that celebrate Christmas should happily celebrate it.  And those who don't  can enjoy the "holiday season" any way they like.  That's  the beauty of our free society...we get to choose for ourselves.  Any questions?

    I'm sure the debate will continue.
    KC's View:

    Published on: November 10, 2015

    In Monday Night Football action, the Chicago Bears defeated the San Diego Chargers 22-19.
    KC's View:

    Published on: November 10, 2015

    A website called Coupons in the News is reporting this morning that bankrupt Haggen, even as it looks to begin auctioning off the stores that it acquired from Albertsons earlier this year, is laying the groundwork to sell off all of its stores and go out of business.

    According to the story, "Haggen has requested a hearing to seek 'approval of the proposed sale of the Debtors’ Core Stores.' Those would be the 32 locations it had previously said were not for sale ... Half of them are original Haggen locations, dating back to before the chain’s ill-fated expansion plan, while the remaining half are Albertsons and Safeway stores that the chain purchased earlier this year, and had hoped to hold onto."

    “As part of the Debtors’ overall sale strategy,” Haggen’s motion reads, “the Debtors have decided, in their business judgment, to sell all or substantially all of the Assets — which collectively represent the Debtors’ most valuable store locations — in order to further maximize recoveries to the Debtors’ estates, their creditors, and all parties in interest.”

    Haggen could not be reached for comment on the report.

    To recap the events that brought Haggen to this low point in a history that dates back to 1933 ... the current problems began when Haggen - apparently prompted by Comvest, the private equity group that owns it - decided to grow from an 18 store-chain in the Pacific Northwest to a 164-store chain extending to California, Arizona and Nevada by buying units that the Federal Trade Commission (FTC) said had to be divested when Albertsons acquired Safeway. Almost from the beginning, when the transitions seemed to consist of new signs on the buildings and extremely minor changes inside the stores, Haggen ran into trouble because of prices that were too-high, out-of-stocks that were too numerous, and dwindling customer traffic because of an offering that seemed highly undifferentiated in highly competitive markets.

    Haggen had declared bankruptcy and decided to sell all but 32 stores (in a story below, Albertsons wants 36 of them back), but now appears to be ready to pack it in for good.
    KC's View:
    While Haggen is not yet commenting on this story - either to me or to the source of the story - one has to admit that it seems entirely within the realm of probability. At this point, it would seem that the debts are too deep and the brand equity too eroded for the company to have any sort of sustainable path going forward.

    This is a shame in so many ways, and it speaks to so many breakdowns in the system. There are the financial guys who saw numbers but seemed to have no sense of the realities of the marketplace or the capabilities of the company. (They get the Gordon Gekko award ... and they'll probably do just fine when all this is done ... this always smelled more like a real estate play, anyway.) There are the government regulators, who almost certainly need to overhaul what their definition of "competition" means in a world where online shopping has changed the paradigm; they also need to have a better understanding of how companies operate and that, especially in retailing, building a brand is far more difficult than just changing ownership.

    But, hey, we can't let the guys running Haggen off the hook ... because they seemed to buy into this whole mishegoss plan without any sense of what they could do and couldn't do. And you can probably argue that Haggen's problems date back pretty far, when it used to spend money on things like private planes and club memberships for senior execs, creating a business model that could not be supported by the stores. People in the know tell me that except for the years that Jim Donald was in charge - getting the stores in shape, the balance sheet in line, and understanding that the company's brand equity was inextricably tied to the quality of its people and the value proposition in the stores - Haggen has been on a losing trajectory for a long time.

    I wish I could say that the problems seem obvious only in retrospect. But I don't think that's true. I just think that the people running and funding things not only didn't know what they were doing, but they mismanaged the company to the point where it was FUBAR.

    And by the way ... Haggen may say - when it finally comments - that it is only laying the legal groundwork for a possible sale in the hope that it won't actually have to pull the trigger. But my guess is that this trigger is going to get pulled, and that it is going to happen sooner rather than later.

    The problem is that a lot of good people with years, even decades invested in this company, stand to lose their jobs or, at least, much of the personal equity that they've built up.

    It is such a shame.