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    Published on: November 16, 2015

    by Kevin Coupe

    The Wall Street Journal this weekend had an interesting piece about how several New York City churches "are rethinking their approach to religious education, believing a change at the youngest ages will make it more likely that families will keep coming to church and that young people will grow up to be churchgoing adults."

    This means, the story says, dispensing "with the didactic Scripture teaching, religious workbooks and off-the-shelf curriculum of traditional Sunday school." It also has meant, in the case of the 85-year-old Riverside Church, spending "about $300,000 overhauling its Sunday school classrooms to create bright, flexible spaces, including a lounge area for teens. The revamped curriculum, introduced this fall, embraces the ethnic, economic and religious diversity of New York and is adjusted for families led by a single parent or same-sex parents."

    There are a variety of ways in which churches are changing with the times - not veering away from core values, certainly, but understanding that traditional Sunday School classes simply won't seem relevant to today's modern child. If Sunday School ends up serving as a wedge between the child and a religious tradition, the tradition ends up dying, and so, eventually, does the religion.

    It seems that churches - as well as businesses - have to embrace the importance of being differentiated, authentic and relevant if they are to survive, much less thrive. And I suspect that for both it is a 24/7 effort ... not just on Sunday.

    It is an Eye-Opener. Can I get an "Amen"?
    KC's View:

    Published on: November 16, 2015

    The US Food and Drug Administration (FDA) on Friday released final new rules under the Food Safety & Modernization Act (FSMA) that, as the New York Times reports, "for the first time put the main responsibility on companies for policing the food they import. The rules also include new safety standards for produce grown on American farms. Some take effect in a year."

    The Wall Street Journal writes that "the regulations ... moved the government closer to implementing a law passed by Congress in 2010, which marked the biggest overhaul of federal food-safety oversight in 70 years. The regulations follow a wave of deadly outbreaks in the past decade that have been traced to produce—such as tainted spinach, cantaloupe and caramel apples—and are aimed at creating a food-safety system that will be less reactive and better at preventing contamination."

    The Times goes on: "The new rules require importers to show that the food they bring into the United States meets American safety standards. They would do that by hiring third-party auditors to check the safety of the food in foreign facilities, a system that some consumer advocates had cautioned might give companies too much discretion but that federal officials argue is the standard for the food industry and will be brought under the spotlight of federal oversight ... The produce rule sets standards for growing, harvesting, packing and storing produce on farms in the United States. It includes requirements for water quality, employee health and hygiene, and manure and compost use."

    “These rules represent a lot of compromises," David Plunkett, a senior staff lawyer at the Center for Science in the Public Interest’s food safety program, tells the Times. “But imported food will at least now have someone who is responsible for assuring its safety. The bottom line is the food supply will be safer.”

    However, the rules don;t exactly represent a done deal.

    The Journal notes that "Friday’s announcement means just two of the seven major rules under the 2010 Food Safety Modernization Act still need to be finalized by the deadline next year.

    "It is unclear, however, if the FDA will receive all of the funding the Obama administration says it needs to fully implement and enforce the law. The FDA has said it requires $260 million, including $109.5 million for the fiscal year that began Oct. 1. President Barack Obama requested that amount, but appropriations bills in both the House and Senate included just $41.5 million and $45 million, respectively, for fiscal 2016, when all the rules will be finalized."

    Food industry executives were generally laudatory in their responses. Among them...

    “These final rules published today reflect many, but not all, of the amendments PMA and other leading food trade organizations have recommended in their comments to FDA in the last few years,” said Jim Gorny, PMA vice president of food safety and technology. “We’re pleased that FDA considered the practical needs of the produce industry; however, we still have concerns and questions about some of the specific implementation details regarding these rules.

    "The publication of these FSMA rules is not an endpoint but rather a beginning, which now requires understanding, planning, implementation and verification by businesses. To that end, we’re pleased to learn FDA will also soon be issuing important companion guidance documents for these final rules that will provide more detailed information about coverage and compliance requirements.” 

    American Frozen Food Institute (AFFI) Interim president Joseph Clayton said that AFFI stands ready "to work with the administration and Congress to ensure sufficient federal resources are allocated to FDA’s critical food safety activities without imposing new costs on food makers and consumers through user fees.”

    And Food Marketing Institute (FMI) Vice President of Food Safety Programs Hilary Thesmar said, “We are anticipating a long road ahead with FSMA implementation; we look forward to working closely with the agency and the food retail industry’s supply chain partners on implementing a consistent system that only strengthens the safest food supply in the world.”
    KC's View:
    It would be just like the US Congress to pass legislation and then do its best to financially handcuff the FDA from being able to implement the very regulations that it is supposed to enforce. That way, elected officials can get credit for addressing food safety without actually having to deal with the reality that such things cost money.

    In the most general sense, these regulations simply acknowledge a simple reality - as food safety issues proliferate, in part because of consumer desire for "cleaner food" and a growing distrust of "big food" companies - these same consumers are going to hold companies responsible for missteps, mistakes and malpractice. It is critically important that companies be compelled to have better food safety procedures and keep better food safety records so that the system can respond more efficiently and effectively - and transparently - when problems occur.

    We've been talking about food safety in this vein for a long time here on MNB ... long before we had a sponsor, ReposiTrak, that was focused on providing solutions. (I mention this because I think it is important to be transparent and acknowledge that I do, in fact, have a dog in this hunt. But it doesn't matter ... because I'd being say all this regardless.)

    Published on: November 16, 2015

    CNBC reports that the iconic west coast burger chain, In-N-Out, has filed a lawsuit against delivery service Door Dash, demanding that the service stop delivering its burgers and refrain from using its trademarks in a away that inaccurately implies a relationship between the two companies.

    "We have asked DoorDash several times to stop using our trademarks and to stop selling our food," says the restaurant's general counsel, Arnie Wensinger. "Unfortunately, they have continued to prominently use our trademarks and serve our food to customers who believe that we are responsible for their delivery. Prior to filing the lawsuit, we tried contacting them several more times but they never responded to our phone calls or letters."

    A Door Dash spokesperson tells CNBC, "DoorDash uses its innovative logistics technology to deliver the very best food and products in neighborhoods across the country. While we have various relationships with different merchants, we are proud to help people get their favorite food delivered directly to their door." However, the spokesperson appears not to have specifically replied to the lawsuit.

    CNBC notes that "DoorDash currently delivers meals in more than 250 cities and has partnered with national chains like 7-Eleven and Taco Bell."
    KC's View:
    The key difference between In-N-Out and Door Dash is implicit in the Door Dash response. Door Dash is interested in logistics technology, and In-N-Out is interested in food that tastes great. In this case (and likely in others), these two interests simply may not be compatible.

    I have no idea what the legalities may be, but I certainly hope that In-N-Out wins its lawsuit and gets Door Dash to cease and desist; it ought to have the right to protect the integrity of its brand, in which taste is absolutely central. By portraying itself as a partner and delivering food in a way that In-N-Out finds to be unacceptable, Door Dash is able to diminish the chain's essential value proposition. (This is less of an issue with 7-Eleven and Taco Bell, to be brutally frank.) That's not cool.

    I've always believed that this is one of the real problems with these delivery companies; the fact is that companies like Instacart have been able to strong arm some retailers into working with them because they essentially threatened to shop their stores and charge higher prices for products, undermining long-cultivated price images in a way that some retailers found to be unacceptable.

    No question in my mind that In-N-Out is in the right on this one. I hope they win the case ... animal style.

    Published on: November 16, 2015

    Haggen Inc. announced on Friday that the U.S. Bankruptcy Court for Delaware in Wilmington has approved the sale of eight Southern California stores to Gelson's Markets for $36 million, and 28 Southern California stores to Smart & Final for $56 million.

    Haggen also said that it "has accepted bids for certain ... non-core stores.  A total of 55 stores were sold for more than $47 million. Haggen intends to submit the results of the auction for approval to the bankruptcy court at a hearing on November 24." Among the bidders were Albertsons (which is looking to regain control of some of the stores that it sold to Haggen when federal regulators said that it had to divest units after its acquisition of Safeway), Smart & Final, Sprouts, Bristol Farms and Stater Bros.

    The Los Angeles Times writes that "Albertsons was the big winner, ironically, by winning the right to buy 33 stores. Eleven locations are in California, including one in San Diego and two in Bakersfield ... Sprouts won four stores.

    "Several other chains agreed to buy a single store, including Stater Brothers Market and Bristol Farms. Of the stores up for auction, 40 did not find buyers."

    Haggen also has been reported to be considering the sale of the 18 stores that it had before the disastrous decision to grow to a 164-store chain via the purchase of stores made available because of the Albertsons-Safeway deal.
    KC's View:
    Even from afar, it is just a little painful to watch this take place. Not that Haggen ever really owned any of the stores beyond the original 18 in any meaningful way ... they just had their name over the front door. Which is really the core of the problem.

    Published on: November 16, 2015

    USA Today reports that Amazon introduced its Amazon Pantry service to the UK last week, the fourth market where the program has been made available, following the US, Germany and Austria.

    According to the story, "The grocery delivery service allows customers to order up to 44 pounds (20 kilos) of pantry items that don't require refrigeration for a flat fee of £2.99, which is $4.54. The box is delivered the day after the order is placed."

    Bloomberg writes that "the move will provide a fresh source of concern for established supermarket chains such as Tesco Plc, and also for Internet-only grocer Ocado Plc. The industry’s profit margins are being pressured by a price war resulting from the expansion of German discounters Aldi and Lidl. J Sainsbury Plc said this week it sees no end in sight to the falling grocery prices that have weighed on sales and profitability."

    Amazon Pantry is only available to Amazon Prime members.
    KC's View:
    Pantry is part of the Amazon's broader strategy - get people to sign up for Prime, which tends to turn them into more frequent and profitable customers, and then offer them even more inducements to buy from Amazon, which leads them to become even more frequent and profitable customers, creating an ecosystem of sorts that establishes a path of least resistance between the shopper and Amazon, which creates even more frequent and profitable customers...

    You get the point. The only difference in the UK is that they do it all with a stiff upper lip.

    Published on: November 16, 2015

    The Christian Science Monitor reports that Starbucks has announced that 97 of its stores in the Seattle area have been declared to be official "Safe Places" for members of the Lesbian, Gay, Bisexual, and Transgender (LGBT) community.

    The story says that the declaration was made in partnership with the the Seattle Police Department’s “Safe Place” program, which requires employees to be trained “how to respond to and engage with LGBT victims of violence and effectively report hate crimes to police." According to the Monitor, the program, "started by openly gay Seattle Police Officer Jim Ritter, is a campaign against bias crimes. Since May, Officer Ritter has spoken with 650 businesses across Seattle, all of whom have supported the campaign, displaying rainbow-badge decals in their windows."
    KC's View:
    It is a shame that any city has to have a "safe place" program to protect any of its citizens ... but kudos to Seattle for addressing this specific issue head-on. Of course, we seem to be reminded on a consistent basis of how much hate there is out there for so many people, all of it related to their place of birth, the color of their skin, the religion they practice, their gender-orientation, or whatever happens to stir the ire of intolerant and ignorant people. Sure, we're living in 2015 ... but there are moments when it might as well be the dark ages.

    Published on: November 16, 2015

    The New York Times, as part of its weekly "Workspace" series, has an interview with Jerry Stritzke, president and chief executive of REI, which made news earlier this month when it announced that not only won;t it join the retailers opening on Thanksgiving, but will remain closed on Black Friday and will pay its employees for the day, encouraging them to go on hikes or engage in other outdoor activities.

    In the interview, Stritzke related it to the REI narrative, explaining it this way:

    "I’m a huge fan of storytelling that lets employees know who we are. To that end, we decided that it would be more authentic for us to close all 143 of our stores this Black Friday. We believe Black Friday has become more about getting stuff than having experiences with your loved ones in the outdoors ... We actively seek open dialogue at REI, I believe in stepping up, listening to all sides and taking action. Transparent leadership is the only way to go in a transparent age."
    KC's View:
    We do love the idea of storytelling around here ... and so kudos to Stritzke for understanding how important it is not just to talk the talk, but walk the walk.

    It makes me - and a lot of other people - want to spend our money at REI.

    Published on: November 16, 2015

    The Washington Post had a story over the weekend about how "more employers, it seems, are getting comfortable with the idea of employee ink."

    One example: the sandwich chain Jimmy John's, which traditionally has kept tight controls over every aspect of employee appearance. In this case, however, the company seems to have a simple rule: " If your mom wouldn't approve, better cover 'em up."

    Which sounds, the story says, "a lot like the approach several other large employers have recently taken as they make changes to their rules on tattoos. Starbucks and PetSmart made a similar policy shift last year to allow for 'appropriate' tattoos."

    The Post writes that "there's little question that younger workers are fond of body ink, and employers may be trying to respond. A 2010 study by the Pew Research Center found that nearly 40% of millennials have tattoos, and that nearly half of those who have tattoos sport two to five.

    "It could also be that, as more people with tattoos have risen in the corporate ranks, they're increasingly supporting policies that are ink-friendly."
    KC's View:

    Published on: November 16, 2015

    • Smoothie chain Jamba Juice announced that it plans to introduce a new smartphone application that will allow customers to place orders via their mobile devices and have them ready when they get to the store.

    The company says that "the Jamba mobile order ahead app will reduce wait times for guests and continue the brand’s ongoing commitment to enhance the in-store experience."

    And Julie S. Washington, Jamba's chief marketing and innovation officer, noted that “the mobile app will provide us with additional data about app users and their purchase behavior which will enable us to provide more targeted messaging and drive increased revenue."
    KC's View:
    Just another link in the chain of companies that are embracing the mobile opportunity...

    Published on: November 16, 2015

    ...with brief, occasional, italicized and sometimes gratuitous commentary…

    Dow Jones reports that the US Postal Service (USPS) has posted that its fiscal 2015 "controllable income" (which does not include government-mandated retirement payments, for example) was $1.2 billion, down from $1.4 billion in 2014. Meanwhile, the story says, "controllable operating expenses climbed by $1.3 billion to reach $67.6 billion." And, the USPS "had total mail volume of 154.2 billion pieces, down from 155.5 billion last year."

    The good news? "The Postal Service recorded a net loss of $5.1 billion, compared with a loss of $5.5 billion in 2014," the story says, adding that "shipping and package volume climbed 14%."

    The USPS has a big hole to dig out of, with a lot of competition working against it ... but I have to believe that whenever it can offer more and better service, it is moving in the right direction.

    • The National Retail Federation (NRF) is out with a survey saying that "56.6 percent of those celebrating the holidays had already started shopping by early November, up from 54.4 percent last year and 16 percent from the 49 percent who had started by this time in 2008, the first time NRF asked the question. This also marks the highest percentage seen in that timeframe."

    • The New York Times reports that Apple is negotiating with banks about the creation of a new service "would let people use their smartphones to send money to one another as easily as they send messages, according to a person with knowledge of the conversations, who spoke on the condition of anonymity. The service, which could be ready as soon as next year, would compete with PayPal’s peer-to-peer payments app Venmo, and Square’s Square Cash."

    The service would "give iPhone owners another reason to use their Apple Wallets," the story notes, adding that peer-to-peer payment services are growing in popularity: "For companies like Apple and Facebook, peer-to-peer payments are a way to involve customers more deeply with their products and to encourage them to leave their wallets at home."

    • In the UK, the Evening Standard reports that Tesco has decided to pull the plug on its Hudl tablet computer, saying that the second version of the product has sold out and that there are no plans to make more or develop a third iteration.

    While the Hudl was seen as a successful product, the paper notes that Tesco CEO Dave Lewis "is stripping back Tesco to focus on its core supermarket offering," and selling off non-core businesses.

    • The New York Business Journal reports that Target plans to open its second store in Manhattan in about a year, in Tribeca - a 45,000 small-store format that will go into a location where Fairway originally planned to open a store, but abandoned its plans because of its own financial issues.

    Target already has a store in Manhattan's East Harlem neighborhood.

    And yet, there are no Walmarts in Manhattan, because somehow that would be wrong. Hard to figure...
    KC's View:

    Published on: November 16, 2015

    Got the following email from MNB reader Larry Ishii about the kroger acquisition of Roundy's:

    I was at Fred Meyer, Inc. when it was merged with Kroger. I actually went through the entire Yucaipa acquisition/merger activity from 1991 through Kroger. What I have seen is that Kroger takes a much different approach – a much “healthier” one – to acquisitions. They take a long hard look at what they are acquiring (or, have acquired) and they do not rush in with “knee-jerk changes in the name of creating those “efficiencies of scale”. Just watching what they have done with Harris Teeter has been very interesting and enlightening at the same time. I applaud Kroger on their approach, having been through eight or nine consolidations myself.

    I spent one year with Kroger in grocery (before returning to my “roots” in GM/HBC with a different company) and I found Kroger to be an amazing company. Simply put, Kroger does it right – or, as right as one can expect.

    I have known Bob Mariano since his Dominick’s days and admire what he has accomplished with Roundy’s. This is a great “marriage” but you are exactly right that in time changes will come.

    Bob might not be there any longer but chances are that the stores will be stronger and have a much better chance to be competitive for a long time to come and the employees can feel comfortable that they are now with a very secure and very well run company (not that Roundy’s alone was not).

    From another reader:

    I am surprised you published Tom Murphy’s crazy comment “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.”

    I know many older white males who are cutting edge in every way.  But the real issue is would you publish a comment “Yucaipa is made up of too many old people and black females?”
    You can label me as fringe, too politically sensitive or whatever, but suggesting failure is based on age or color is wrong—even if it is old white men. And you are wrong to not call it out.

    This is a fair point ... though I have to admit that over the years, I've often made the observation that the industry is led by too many middle aged white guys who don't get it. So I didn't call it out because I'm guilty of making the same sort of crazy comment.

    You're certainly right that it never is a good thing to over-generalize. But Tom also was making a good point - that too many companies have leaders who see the world one way even as the world changes. Just because of where the power always has resided, those leaders tend to be aging white guys.

    Regarding the labor move to push Walmart to offer more discounts on food to employees, one MNB user wrote:

    I am a former associate at Walmart, and they have always expanded their associate discount to food products, beginning just before Thanksgiving through New Years Day. Walmart is not getting enough credit for the benefits they provide their associates on a regular basis.
    KC's View:

    Published on: November 16, 2015

    It's Week Ten in the National Football League...

    Jaguars 22
    Ravens 20

    Browns 9
    Steelers 30

    Panthers 27
    Titans 10

    Bears 37
    Rams 13

    Cowboys 6
    Buccaneers 10

    Lions 18
    Packers 16

    Dolphins 20
    Eagles 19

    Saints 14
    Redskins 47

    Vikings 30
    Raiders 14

    Chiefs 29
    Broncos 13

    Patriots 27
    Giants 26

    Cardinals 39
    Seahawks 32
    KC's View: