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    Published on: November 19, 2015

    This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, Kevin Coupe here, and this is FaceTime with the Content Guy.

    I was reading a piece the other day about how the "disintermediated media world is characterized by consumer choice which facilitates consumer control over the media they wish to use."

    Which is sort of the argument I make all the time about retail. Retail is at a different stage in the shift, but it is all happening ... there are more products out there are more ways to get them, which means that consumers increasingly have all the control. Retailers and manufacturers that don't accept this ... embrace it, even ... run the risk of growing irrelevance.

    Which in business, is the wrong kind of growing.

    In reading about the disintermediated media world, there was another observation that intrigued me ... that as media content becomes available in more places, traditional methods of measuring success become outmoded. In a lot of ways, we're headed on a path where things like traditional ratings measurements and traditional advertising support may not mean very much.

    I wonder if there is a corollary for traditional retailers. There always have been traditional measurements for how businesses evaluate themselves, and one of the things that always has frustrated traditional retailers about Amazon is the fact that they seemed to ignore so many of them ... while its appeal to customers only increased.

    In business, that's the right kind of growing.

    And I guess I find myself thinking of businesses have to start rethinking the whole notion of measurement. Not saying that sales and profit and return on investment are not important ... but maybe they just need to be looked at and calculated differently.

    Call me crazy...

    I think it is important, even as we get older, to maintain a sense of wonder about the world. I maintain a healthy level of skepticism and even cynicism, but I also am continually amazed by the strides and innovations that I read about, and report on, virtually every day.

    Those days tend to pile up. Today happens to be the 14th anniversary of the first day that I sat down to write MNB, knowing that a hundred or so friends of mine might read it, and hopefully like it. Today ... some 14 years and something like 10 million words later, we have a subscription base of more than 33,000 ... and it has turned into what I like to think is a community of people where we like to share ideas and challenge each other about really important issues like the beer and wine preferences, the travesty of the designated hitter, morality and ethics, and who was a better captain, Kirk or Picard. (Personally, I'm big on Sisko.)

    Mostly, today, I want to say thank you ... to the great sponsors who have supported me, and to you, for showing up every day, for all the emails, and for keeping me out of trouble and occasionally helping me get into trouble, for all these years.

    I am occasionally asked how long I'm going to do this ... and to be honest, I've given it some thought. I'm not making any commitments, but I'm thinking that 25 years is a nice round number. Which means I have another 11 years to go.

    At least.

    Because I cannot imagine giving this up ... because it is the most professional fun I've ever had.

    That's what is on my mind this Thursday morning ... and as always, I want to hear what is on your mind.

    KC's View:

    Published on: November 19, 2015

    by Kevin Coupe

    Retail System Research (RSR) is out with a report saying that "85 percent of retailers showed the same home page to new and returning visitors," "83 percent of retail mobile sites do not leverage any previous shopping behavior information to help online shoppers," and "74 percent of IR100 sites have no memory of past products browsed by users during previous visits, which forces shoppers to start the entire discovery process over again."

    To me, this suggests that an enormous number of retailers either don't understand the power of Amazon, don't believe that Amazon's ability to do all these things has the potential to significantly handicap their growth, or live is a kind of delusional parallel universe where specific customer data that allows businesses to specifically and relevantly target shoppers isn't used and doesn't matter.

    Parallel universes may exist. But not this one.

    Every shopper who goes on Amazon sees a different page than every other shopper who goes on Amazon. We all get different offers, different promotions, all keyed to past purchasing and browsing behavior. Amazon knows what we're interested in, what we've bought, and what we are likely to buy if nudged in the right direction.

    That's the universe that we live in. That is the universe in which retailers have to do battle.

    You can think of Amazon as the Death Star, or as the Rebel Alliance. It doesn't matter.

    You have to come prepared to battle. Numbers like these are Eye-Opening, because they suggested a lot of retailers aren't really in the game.
    KC's View:

    Published on: November 19, 2015

    The Milwaukee Business Journal has a story saying that one retail analyst, Carol Levenson of the bond analysis firm Gimme Credit, believes that Kroger's acquisition of Roundy's is far from a slam-dunk success.

    Levenson says that the "fiercely competitive" Chicago and Milwaukee markets "have almost defeated Roundy’s and have defeated other chains before it ... “Although it’s true that Roundy’s has probably been somewhat starved for capital, we question whether its considerable problems can be fixed simply with new ownership and higher investment."

    The Levenson letter to investors "questions whether Kroger can turn the company around," the story says, and calls Roundy’s a “struggling” company, "pointing out its same-store sales have fallen or been flat for the last six years. Meanwhile, Kroger has a streak of 47 straight quarters of same-store sales growth."

    The Business Journal story goes on: "Analysts and consultants interviewed for last week's cover story on Kroger's acquisition would no doubt dispute Levenson's characterization. Although most have taken a 'wait and see' approach on Kroger's plans not to shutter underperforming stores, the consensus is that Kroger can leverage its formidable supply chain and commendable business practices, as well as returns from that debt refinance, to invest in the struggling stores and turn sales around."
    KC's View:
    There seems to be a minor debate taking place in the punditry class about whether or not Kroger will close underperforming stores ... the focus seems to be on whether Kroger will replicate the way it dealt with Harris Teeter in that acquisition, or whether it will have to behave differently with Roundy's since it is more of a fixer-upper than Harris Teeter was.

    This strikes me as much ado about nothing. The fact is that Harris Teeter and Roundy's are two different companies, so of course there will be differences in how Kroger implements those acquisitions. And, the way Kroger deals with Roundy's Mariano's chain probably will be very different from how it deals with other, less distinctive and successful units.
    The one thing I'm pretty sure of is that Kroger will do this right, because that is its history.

    Published on: November 19, 2015

    The Los Angeles Times reports that Google Express, the company's overnight delivery system that provides services to retailers that include Target, Walgreens, Kohl's and Costco, "is now available to everyone in Southern California, from San Diego to Anaheim to Downtown LA ... Once registered, customers can browse products from different retailers through the Google Express portal and have those products delivered overnight. Residents in West Los Angeles can have certain items delivered the same day."

    With the expansion of the service, the story says, "customers across Southern California will have the option to sign up for a $95 annual membership, or pay a fee of $4.99 per eligible order to use the service."

    It is, in fact, a crowded field in the area: "Google Express joins the likes of Instacart and Postmates — on-demand services that offer same-day delivery in Los Angeles from retailers such as Ralphs, American Apparel and Whole Foods — in helping people outsource their shopping," the Times writes. "Los Angeles has been ripe for on-demand delivery services, with UberEats (lunches delivered by Uber drivers), Munchery (on-demand dinners), Luxe Valet (on-demand valet parking) and Shyp (on-demand parcel pickup and delivery) launching in the region over the last two years."
    KC's View:
    Ripe, indeed. Not all these efforts will succeed. Indeed, the eventual winner may not even be on the board yet. But some of these are going to bear fruit, and change the way the game is played in Los Angeles.

    Published on: November 19, 2015

    The Canadian Press reports that both Loblaw and Metro yesterday "tackled the rising popularity of e-commerce shopping on Wednesday during their quarterly conference calls as the companies delivered stronger overall profits and revenues.

    "Pressure has been mounting for Canadian grocers to respond to evolving consumer habits that show more people are using their computers and smartphones to shop for lower prices and buy online."

    According to the story, "Loblaw president Galen Weston said he sees a chance to expand its pickup service beyond grocery stores and into the Shoppers Drug Mart chain, which the company also owns ... But Weston isn't as confident that store-to-door delivery is the future of his business at this point."

    Next, year, the story says, Metro "will begin testing its own e-commerce project that could include in-store pickup or delivery. So far, the company, whose banners include Metro and Food Basics, has declined to offer any details. In a call with analysts, Metro's chief executive Eric La Fleche was reluctant to proclaim online shopping as the next step in how consumers buy their food."
    KC's View:
    The folks at Loblaws and Metro know their markets and customers better than I do, but there seems to be a bit of hesitancy in their positioning that I find to be a little worrying.

    E-grocery is never going to replace the bricks-and-mortar store, but I think the only way to find out how big it can get is to embrace the simple fact that consumer behavior has changed in dramatic and fundamental ways.

    One of my favorite proverbs is, "He who hesitates is lost." I think that may apply here.

    Published on: November 19, 2015

    Twin Cities Business reports that Target CEO Brian Cornell said yesterday that progress is being made in the overhaul of the chain's food departments, and that the company will "focus its efforts on wellness and seasonally appropriate items in the future. Renovations to grocery areas will slowly roll out, he added, beginning with 25 grocery remodels in Los Angeles and other SuperTargets."

    Cornell said that “while we aren’t shouting about it, we are bringing steady progress to food.”

    Cornell made the comments as Target released its third quarter results saying that it had a 56 percent increase in profit to $549 million on total revenue from was up 2.1% to $17.61 billion, and same-store sales that were up 1.9 percent. Digital revenue, however, was only up 20 percent, short of the 30 percent increase that the company had projected.
    KC's View:
    E-commerce revenue that is up 20 percent doesn't sound all that awful, except when compared with expectations. I think it is better to follow the "slow and steady wins the race" approach, which while it may not play as well on Wall Street, likely is the absolutely best way to play the game on Main Street.

    Published on: November 19, 2015

    The Boston Globe reports that Dunkin' Donuts "is testing mobile pre-ordering in Portland ... The Canton-based chain announced Wednesday that members of their DD Perks Rewards Program can download the DD On-the-Go Ordering Portland app this week, “which enables guests to order in advance using their mobile phone, skip the line and go straight to pick up," either in-store at using a drive-through window.

    The story says that users pay for the order "through the chain’s DD Perks card," and can place orders as much as 24 hours in advance.

    The On-the-Go app is expected to roll out nationally next year.
    KC's View:
    A critical innovation for Dunkin' Donuts, because it allows it to compete effectively with Starbucks in the mobile arena. I think there's plenty of room for both of them.

    Published on: November 19, 2015

    In the UK, the Guardian reports that the newest figures from Kantar show that discounters Aldi and Lidl have grown to the point where they together represent 10 percent of the grocery market there.

    "As Kantar pointed out," the Guardian writes, "Aldi and Lidl have grown from 5% of the market to 10% since 2012; it had previously taken the duo nine years to crawl from 2.5% to 5%. It is probably now too late to prevent the discounters from claiming 15% because they are flogging expansion for all its worth. But, if the mainstream brigade wish to stop 15% becoming 20%, they will have to start throwing some punches that the opposition actually feels."

    One of the things preventing the opposition - which includes companies like Tesco and Walmart-owned Asda - from doing so, the story suggests, is a desire to protect margins ... which restricts their ability to compete in a way that blunts the discounters' growth.
    KC's View:
    I've been saying this for months ... US retailers need to pay close attention to the mistakes that have been made in the UK by traditional retailers that have failed to compete effectively with Aldi and Lidl. Because the same thing can happen here ... and will, if they're not careful.

    Published on: November 19, 2015

    CNBC reports that "Wal-Mart still buys heavily into the China story, despite slowing growth in the world's second-largest economy,:" according to the chain's Asia CEO/president Scott Price. The story says that "speaking at the Asia-Pacific Economic Cooperation (APEC) CEO Summit in Manila, Price said he expected China to drive more than half of the retail sector's growth over the next decade."
    KC's View:

    Published on: November 19, 2015

    • The San Jose Mercury News reports that Facebook "is partnering with 37 U.S. nonprofits to test an improved donate button and a new fundraiser tool.

    "With 1.5 billion users on Facebook and social media use on the rise, nonprofits don't want to miss out on what could become a popular place to contribute down the road as more people complete tasks on their smartphones."

    The story goes on: "More than 150 million people globally are connected to a cause on Facebook and the world's most popular social network has seen that even small amounts can translate into big bucks for charities, especially when people make snap decisions. In 2014, millions of people -- encouraged by celebrities -- uploaded videos of themselves dumping buckets of ice on their heads, fueling a viral social media campaign that helped raise more than $100 million for The ALS Association in the fight against the neurological disease amyotrophic lateral sclerosis. This year, Facebook raised $15.5 million for Nepal earthquake relief after displaying a donate button at the top of users' News Feeds."
    KC's View:

    Published on: November 19, 2015

    • The US House of Representatives Energy and Commerce Committee yesterday voted 32-12 in favor of the Common Sense Nutrition Disclosure Act of 2015, adopting modifications to the U.S. Food and Drug Administration’s (FDA) chain restaurant menu labeling rule to make it workable in grocery store and convenience store settings.

    The move was lauded by food industry organizations that include the Food Marketing Institute (FMI) and the National Association of Convenience Stores (NACS).

    The bill now goes to the full House for debate and a vote.
    KC's View:

    Published on: November 19, 2015

    ...will return.
    KC's View: