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    Published on: November 23, 2015

    onday Morning Eye-Opener: E-Pilgrims
    by Kevin Coupe

    Dunnhumby is out with a Thanksgiving consumer trends survey, concluding that "59 percent of Americans aged 25 to 34 plan on hosting a Thanksgiving dinner this year," and that these millennials "are exploring new shopping options in addition to the traditional supermarket, and are far more likely to leverage technology in the planning and implementation of their holiday dinner."

    Twenty one percent of 25 to 34 year olds, the survey says, "report plans to buy groceries for their holiday meal using a food delivery app (such as Instacart, Shipt and Google Express) while 16 percent say they’ll be using an online grocery delivery service (such as Peapod, FreshDirect, Amazon Fresh or BlueApron). This is an incredibly sharp contrast with the outlook for their parents and grandparents, as none of those 55 years old and older reported plans to use either of these types of services."

    The survey goes on: "These established Millennials are also the most likely to break from tradition and use online resources to find cooking ideas and recipes this Thanksgiving. Nearly half (48 percent) of 25 to 34 year olds say they plan on using social media websites such as Pinterest, Instagram and Facebook – far above the national average of 27 percent. This age group is also the most likely to turn to other online and mobile resources such as recipe apps (31 percent versus 16 percent of all Americans) and food blogs (27 percent versus just 13 percent of Americans as a whole)."

    Here's what Andy Hill, Managing Director North America, dunnhumby, has to say about the survey's conclusions:

    “We are in the midst a generational and attitudinal shift throughout the United States where technology has given rise to the emergence of the new connected customer – not just in regards to Thanksgiving dinner, but for all retail and grocery shopping. It’s absolutely vital for today’s retailers to understand both offline and online behavior through data and customer science in order to create a complete picture of consumer behavior and preferences – including how they shop, source their information and share experiences with friends and family.”

    To which I can only add...

    Damned right.

    It is an Eye-Opener.
    KC's View:

    Published on: November 23, 2015

    The Washington Post this morning is reporting that Walmart plans to start its online Cyber Monday promotion one day early, with an "online deals bonanza at 8:00 p.m. Eastern Time on Nov. 29, a move that is noteworthy because of what it reveals about how quickly our digital shopping habits are changing."

    The Post writes that "Fernando Madeira, chief executive of Walmart.com, said in an interview that the company is adapting its sale to better meet the needs of the growing swath of shoppers who have near-constant Web access thanks to their smartphones ... Madeira said Wal-Mart has noticed that in recent years, searches for Cyber Monday deals on their app and Web site start to pick up Sunday evening, with many shoppers staying up until the midnight to pounce early. The earlier start time is meant to cater to these shoppers."

    According to the story, while Cyber Monday is expected to be the biggest online shopping day of the season, "Thanksgiving and Black Friday are expected to show stronger growth in online sales this year, a forecast that reflects some of the same cultural shifts that led Wal-Mart to move the start time of its Cyber Monday sale."
    KC's View:
    Seems to me that one of the realities of the new omnichannel retailing environment is that traditional boundaries and lines are going to fall ... there will be no separation between Black Friday and Cyber Monday in terms of how consumers think. I suspect marketers will continue to promote these things for their own purposes, simply because it helps them create silos and categories in which they are more comfortable working. But I think they are foolish to think that they can bring order to a situation in which consumer impulses rule.

    Published on: November 23, 2015

    Reuters reports that more than 40 people have gotten ill from E. coli poisoning after eating at Chipotle restaurants in six different states, as an outbreak that began in the Pacific Northwest - and that the company believed had been contained and addressed - continues to spread.

    The Centers for Disease Control and Prevention (CDC) is saying that "45 people got sick from the E. coli O26 outbreak strain, and of those, 43 reported eating at Chipotle. Sixteen people have been hospitalized and no deaths have been reported," according to Reuters.

    The story goes on: "Chipotle's tagline is 'Food with Integrity,' and it has a reputation for serving healthy, fresh food. This outbreak, the company's third food safety lapse this year, has been a black mark for the popular chain that saw its shares tumble 12.3 percent to $536.19 on Friday.

    "The outbreak also speaks to changing consumer tastes. U.S. diners are demanding more fresh, less processed foods. While such products are generally healthier, cooking and other types of processing can kill pathogens that make people sick.

    "The source of the food contamination has not yet been found, but some investigators and experts suspect produce or another perishable item. High heat kills E. coli, and it is unlikely that all of the affected restaurants undercooked meat."

    Reuters reports that while Chipotle closed all of its Pacific Northwest restaurants when they were implicated in the outbreak, deep-cleaning them before reopening the units, it has not closed the new restaurants that have been identified as a problem, though it has "hired food safety consultants, is testing food and changing food preparation procedures."

    There is no apparent geographic connection to the new incidents - the restaurants are in places like Turlock, California; Akron, Ohio; Amherst, New York; and Burnsville, Minnesota.
    KC's View:
    Let's be clear. These kinds of problems are going to happen more frequently as companies shift to fresher ingredients and away from more processed foods ... it is Chipotle right now, but it could affect a lot of companies long-term. That's not to make excuses for Chipotle, which has to know that it is in very dangerous territory right now.

    My kids love Chipotle, but I've urged them not to use the chain for the time being. There are just too many unknowns, and too many risks.

    I suspect I'm not the only person who feels this way. Chipotle has a food safety issue to deal with, but also has a significant public relations problem with which it must grapple.

    Published on: November 23, 2015

    'The Chicago Sun Times reports that Michael Jordan has reached a settlement with both Dominick's and Jewel-Osco in near identical cases in which the supermarket chains - now both owned by Albertsons - were accused of using Jordan's name without authorization in advertising included in a 2009 limited edition of Sports Illustrated.

    Jordan reportedly will donate the entire settlement to Chicago-area charities.

    The settlement, according to the Sun Times , "comes three months after Jordan scored a slam-dunk $8.9 million verdict against Dominick’s at the end of a two-week jury trial this summer at the Dirksen Federal Courthouse. A trial in the Jewel case had been set to begin Dec. 8, but U.S. District Judge Gary Feinerman canceled it Friday ... The big-money verdict against Dominick’s created sensational headlines in August. However, neither side would reveal on Sunday the terms of the agreement Jordan struck that now resolves both cases."
    KC's View:
    Win-win-win. The chains get this problem off their plates. Charities get some money. And Jordan makes his point.

    Published on: November 23, 2015

    Benzinga.com has an evaluation of The Fresh Market's woes, suggesting that analysts believe that "company’s fundamentals remain challenged and new initiatives are needed to improve the situation."

    The company's new CEO, Rick Anicetti, has said that he is conducting a top-to-bottom review of the business, and has suggested that there are four areas that require attention: Fresh Market's "operating effectiveness"; the "value equation with a goal of stabilizing and expanding comps through investments in services"; "merchandise and pricing"; and "brand differentiation and customer engagement via advertising enhancements and implementation of a loyalty program."
    KC's View:
    Anicetti, a retailer for whom I have a lot of respect, deserves some time to try and right the Fresh Market ship.

    It is an interesting problem. I've been to various Fresh Markets over the years, when I've been visiting friends and it has been a reliable, convenient place to pick up some good wine or a great piece of fish for dinner. But I also have one not that far from where I live, and I never even think about it as an option ... there's nothing negative about it, just a kind of non-presence, even though it is a very nice store.

    I tend to think that the company needs to do a better job of not just creating a more cohesive and distinct vision, but also of presenting that image to the consuming public. Tough job, but Anicetti is a tough guy. I have a lot of confidence in him ... if he has the time.

    Published on: November 23, 2015

    Fortune has a fascinating story about how a combination of singer Patti LaBelle, sweet potatoes, Walmart, and a savvy bakery buyer named Kinna Thomas added up to sales magic.

    The story tells the story of Thomas, who, when she became Walmart's senior buyer for cakes and pies, decided she wanted to raise the company's game and started with her family's sweet potato pie recipe ... and then, looking for some outside expertise, discovered online that LaBelle has a lot of street cred among sweet potato pie aficionados. She reached out to LaBelle, and within 24 hours was in negotiations to exclusively make and sell a pie bearing her name.

    The story notes that "The LaBelle touch worked, notably and intensely with one singer James Wright Chanel. While the resulting pie sold well when it hit shelves in the spring, sales went into the stratosphere last week, selling one pie per second for 72 hours straight at one point, after Chanel posted an ecstatic video of himself serenading LaBelle and her namesake Sweet Potato Pie, a pre-packaged dessert only on sale at Walmart. The video became a YouTube sensation and has been watched nearly 2.5 million times so far.

    "Walmart has gone through hundreds of thousands of sweet potato pies and the shortage has led to some entrepreneurial people to sell them on eBay for as much as $60. They cost $3.48 in the stores."
    KC's View:
    This is a pretty cool story, on several levels. First, it is noteworthy that Walmart seems to be giving its buyers the ability to be entrepreneurial ... and all kudos to Thomas for taking advantage of the opportunity. Second, it seems to be part of a broader effort by Walmart to energize its bakery operations. Clearly, it is working. And third, it speaks to the power of social media's ability to drive sales and create events.

    Published on: November 23, 2015

    • The Richmond Times Dispatch reports that Amazon has begun offering its Prime Now same-day delivery service to a large part of the Richmond area.

    The expedited service is available to Prime members who pay $99 a year; two-hour delivery of "tens of thousands of items" is available for free, while one-hour delivery costs $7.99.
    KC's View:

    Published on: November 23, 2015

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

    Reuters reports that Supervalu "is preparing to explore an outright sale as an alternative to a spin-off of its discount grocery retail chain Save-A-Lot, according to people familiar with the matter." The story says that "Supervalu has received interest in Save-A-Lot from several private equity firms, and has told them that it will consider offers once it registers the unit with regulators for a spin-off in early 2016, the sources said this week."


    • The New York Times this morning reports that pet supplies retailer "Petco is near an agreement to be acquired by CVC Capital Partners and the Canadian Pension Plan Investment Board for $4.7 billion."

    The story notes that Petco "has been bought and sold by TPG Capital and Leonard Green & Partners twice. The first time was in 2000, when they acquired the retailer for $600 million, and then took it public two years later. Then, they bought it back in 2006 for $1.68 billion."

    Petco had "filed to go public in August," the Times writes, "but was simultaneously pursuing a sale."


    • The Battle Creek Enquirer reports that Kellogg Co. will unveil more than 40 products in early 2016 to reflect consumer trends. The products will range from breakfast options to frozen food products, and will include both convenience-oriented items and products defined as "wholesome."

    Two notes here. First, this is what companies have to do in order to be relevant and to grow ... you can't just stand pat with existing lines, because customers are not standing pat. Second, in the interest of full disclosure, I have to point out that Kellogg Co. is a valued MNB sponsor ... for which we salute and thank them.
    KC's View:

    Published on: November 23, 2015

    • Walmart has hired George Riedl, most recently president of Advanced Marketing & Sales, to be its new senior vice president and president of Walmart health and wellness.


    • The Wall Street Journal reports that Albertsons has hired Anuj Dhanda as its new chief information officer. Dhanda comes to the company from Giant Eagle, where he was CIO and senior vice president.
    KC's View:

    Published on: November 23, 2015

    We had a story on Friday about how CVS Health is rolling out what it calls a "suite of new digital tools aimed at helping customers manage their health with more ease and efficiency." But, I wrote...

    I think all these things make sense ... that technology obviously can be a powerful tool in creating loyalty among shoppers who can use it in their own best interests. But ... I also think that CVS could help itself out a lot if it actually maintained a better in-stock position in some of its stores. I've had occasion recently to spend some time in my local CVS, and I've been amazed the degree to which, in some departments, there are a lot of gaps on the shelves. (I tried to point this out to one of the managers, who decided to argue with me about it. This sent me across the street to the much smaller independent drugstore, where they had what I needed.)

    I have no idea if this is true, but purely from a consumer perspective, it certainly feels like CVS has reached a tipping point ... and that it is so big that it is not taking care of the basics. I've done some anecdotal research on this, and I'm not the only customer who feels this way.

    It is great to have all sorts of fancy tools in your toolbox. But it sees to me that you've also got to have a hammer, screwdriver and a wrench. And this is a lesson worth learning by every retailer.


    One MNB user responded:

    Great comment on CVS today.  I just don’t understand the logic behind all of their out of stocks.  I have emailed their district manager a few times and received no response.  It is like that in every CVS I have visited.  Inventory control?  Poor auto replenishment?  Very frustrating from a consumer standpoint.

    And another:

    I totally agree with your assessment of CVS in not taking care of the ”basics” before launching into more sophisticated consumer tools to generate loyalty.
     
    In doing business with CVS, as a supplier, over the past few years, they have demonstrated a very inconsistent focus on in stock. At points it is their highest priority and they KPI the heck out of it with their store associates to insure compliance and at other times they simply lose focus and this manifests itself into significant OOS at store. I was in this week to purchase a specific skin care item and they were out of stock so I went across the street to Walgreens who had it in stock. Store Managers really only have two levers to pull, one being store labor hours and the other being store inventory. More than often they pull back on the inventory level to manage costs.
     
    I will also say that the CVS store culture is different than their competitive set. Walgreens works very hard to hold onto good to great store associates and the impact of this is a significantly better customer service experience than you will see at CVS who have a lot of part-time talent who care less about the company than folks you will meet in a CVS store (such as your experience with the store Manager). We spend a lot of time with CVS speaking to them about poor store compliance and the cost to us and to the consumer who more than half the time will go elsewhere if they can’t find the product.
     
    It seems basic merchandising but they struggle to grasp this simple premise.


    This explains a lot.

    And from still another MNB reader:

    I did some research in 2003-2004 that confirmed what you said in your post about CVS. They had too many stock-outs. Walgreens at that time had a slightly better method of tackling stock-outs that involved physical counting of the "holes" on the shelf to keep an updated stock out position, in addition to an inventory management system.

    It seems that not much has changed in CVS over the years! They have some attractive promotions, but there is an even greater chance that items on promotion will be out of stock and it is a very frustrating experience.

    A clean, well-stocked store, with fast and friendly service, is the first requisite, everything else just adds to that experience.

    KC's View:

    Published on: November 23, 2015

    In Week Eleven of National Football League action...

    Broncos 17
    Bears 15

    Cowboys 24
    Dolphins 14

    Rams 13
    Ravens 16

    Redskins 16
    Panthers 44

    Raiders 13
    Lions 18

    Jets 17
    Texans 24

    Colts 24
    Falcons 21

    Buccaneers 45
    Eagles 17

    Chiefs 33
    Chargers 3

    Packers 30
    Vikings 13

    49ers 13
    Seahawks 29

    Bengals 31
    Cardinals 34
    KC's View: