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    Published on: November 30, 2015

    by Kevin Coupe

    Here at MNB, we talk a lot about the importance of stories, and how a compelling narrative can help a product differentiate itself in the marketplace.

    Well, this morning's New York Times has a story about a product with a really, really great story.

    It is about a wine called marawi, made in Israel from indigenous grapes. And it is the outgrowth of an effort that utilizes DNA testing "to identify - and recreate - ancient wines drunk by the likes of King David and Jesus Christ."

    "For Israeli winemakers," the Times writes, "the search for old-new varietals is an opportunity to distinguish their wares in a competitive global marketplace where they harbor little hope of improving on, say, chardonnay from France. Archaeologists and geneticists are testing new methods for analyzing charred ancient seeds. In the endless struggle between Israelis and Palestinians, it is a quest to underscore Jewish roots in the holy land."

    While the making of the wine is not free from political debate - some Palestinians question the provenance of the grapes - perhaps the most important quality of marawi is that it seems to taste good; one critic calls it “pleasant and easy-to-drink,” and says it “opens slightly in the glass with gentle aromas of apple and peach.”

    In other words, it is a pretty good wine, even without the story. But it is the story that may, in the end, make it transcendent.

    It is an Eye Opener.
    KC's View:

    Published on: November 30, 2015

    Bloomberg reports this morning that "online shoppers outnumbered their brick-and-mortar counterparts during U.S. retailers’ pivotal Black Friday weekend, underscoring the challenges facing American malls this holiday season as Inc. exerts more pressure."

    The numbers, as reported by the National Retail Federation (NRF), are specific. More than 103 million people shopped online during the just-passed four-day Thanksgiving weekend, while fewer than 102 million people ventured into the nation's bricks-and-mortar stores. The research firm ComScore said in a report that "e-commerce sales jump 9 percent on Thanksgiving and 10 percent the following day," Bloomberg reports.

    "The shift online has been a mixed blessing for the retail industry," Bloomberg writes. "While it’s given companies one more way to reach consumers, a slowdown in mall traffic has hurt results at department stores and apparel chains. Many retailers also have struggled to match the online dexterity of Amazon. Neiman Marcus Group Inc., for instance, suffered Web outages on Friday and Saturday, leaving customers frustrated." And the Wall Street Journal reports that Walmart said that high demand slowed down its online checkout process over the weekend.

    The story notes that "the growth of e-commerce - including people using their smartphones to buy gifts - helped boost the total number of U.S. shoppers to more than 151 million over the weekend, according to the NRF. That figure, which accounts for the overlap between online and offline buyers, topped the 136 million that the trade group had predicted."

    NRF CEO Matthew Shay tells the New York Times that "shoppers are taking advantage of a deluge of sales and promotions to shop when they want, and how they want ... Retailers, in turn, are scrambling to offer sales earlier each year, both in stores and online ... Meanwhile, there is 'a broad and deep expectation' among shoppers that sales and promotions will continue far beyond Black Friday, and less of an imperative to spend over the weekend."

    The question now, the Bloomberg story suggests, is how the increase in online shopping over the weekend - apparently at the expense of traditional stores - will impact so-called Cyber Monday sales today. "The term Cyber Monday was coined a decade ago, when retailers noticed a spike in online holiday shopping on the Monday after Thanksgiving," Bloomberg writes. "The reason: Many people returned to work and used their office’s high-speed Internet connection to shop. These days, most Americans have broadband, decreasing the event’s relevance. The NRF predicts 121 million people will shop online Monday, fewer than 126.9 million who planned to do so last year."
    KC's View:
    What amazes me in in some of the coverage is the suggestion that some retail executives and pundits found this shift to be a surprise.

    For example, Fortune at one point wrote over the weekend that "integrating stores and e-commerce is key, top execs say."


    Not everybody is surprised. Advertising Age reports that while "Walmart still has more than five times Amazon's sales overall," consumer survey data from the Advertising Benchmark Index suggests that "the e-commerce giant is poised to edge out earth's biggest retailer in holiday sales this year" ... The survey also found people plan to spend around 60% of their holiday dollars offline and 40% online, and pick up around 14% of those online purchases in stores rather than have them shipped."

    Rather than looking at what just happened this weekend, and what will happen today, I think it is important to look at the broader trend. Black Friday and Cyber Monday increasingly are marketing constructs imposed by businesses upon the calendar, but less and less relevant to shoppers, who are going to make up their own rules.

    I also know this, though I am cognizant that it would be an enormous mistake to look at my own shopping habits as reflective of the general public's. I've done a fair percentage of our Christmas shopping, and most of it has been online. And I expect that this will be my personal trend going forward for the next few weeks.

    Published on: November 30, 2015

    While most retailers spent the weekend puzzling over Black Friday numbers and Cyber Monday expectations, Amazon chose the weekend to unveil a new drone prototype that it says can be utilized to deliver packages within 30 minutes after ordering.

    Narrated by British TV show host Jeremy Clarkson - who recently signed a deal to host a video program for Amazon Prime - and said to take place in "the not too distant future," the video essentially is a case study of a family that needs a pair of athletic shoes quickly, orders them via an Amazon Kindle, and has them delivered via Prime Air drone within 30 minutes.

    Notable in the video is the implication that people will have to opt-in for drone deliveries ... it shows the placement by the consumer of a kind of target as a landing pad for the drones, presumably in a place where there is lots of room. The drones are shown to be able to fly vertically and horizontally, with "sense and avoid" technology that detects obstacles; this one, part of an eventual "family of drones" that Amazon plans to operate, can travel 15 miles and reach an altitude of 400 feet.
    You can watch the video here. Or, click on the window above.

    KC's View:
    There's no question that this will continue to be a controversial technology. There was, for example, a story in the Telegraph in the UK about how an 18-month-old boy "was left blind in one eye when a (drone) propeller sliced through his eyeball while he was playing in the garden."

    (Just reading that phrase makes me wince.)

    It just seems to me that this is happening ... that there will be fleets of drones making deliveries, and that they will be regulated by federal officials. And, if I had to guess, I'd be willing to bet that it won't take long, once this system has become operational, for people to start wondering how they survived before it existed.

    Published on: November 30, 2015

    The Wall Street Journal reports that Target is increasing its in-stock position by as much as 50 percent in select, fast-moving categories, believing that over the next month or so the policy will bear fruit in terms of customer satisfaction.

    The story notes that "Target is one of many major retailers that saw excess merchandise pile up in the third quarter, as sales slowed down across the board. Although some stockpiling is normal ahead of Black Friday and the holiday shopping season, this year’s retail inventories reached particularly high levels at many companies. The ratio of inventories to sales has grown in recent months to the highest levels in five years."
    KC's View:
    Clearly, retailers believe that to compete in 2015 and beyond they have to play the long game ... and have to ignore traditional benchmarks that used to mean something in terms of assessing both efficiency and efficacy.

    It is possible that we're moving from "just in time" to "just in case"...

    Published on: November 30, 2015

    Bloomberg reports that Amazon soon will offer its Prime members "the option of adding other online subscriptions to their accounts, including major, well-known movie and TV channels, and ... will also sell prepackaged bundles of its own creation."

    The appeal of such an offering, the story says, "may help lure new customers to Amazon Prime as it competes with Netflix Inc. and Hulu LLC. The new feature would mark the next evolution in the online giant’s approach to home entertainment, combining its expertise in retail with its growing investment in video. Prime Instant Video would resemble something between a cable-TV subscription, though without live programming, and the online array of video offered through devices from Roku Inc., Apple TV or Amazon’s own Fire TV."

    The companies that decide to do business with Amazon would see two benefits, the story says. One would be some form of revenue sharing, and the other would be access to so-called cord-cutters who are not watching programming available on traditional media, but who are part of Amazon's enormous - and growing - customer base.
    KC's View:
    And once again, we see Amazon's ecosystem expanding.

    I can imagine that these kinds of moves could assuage viewers who resist, say, the idea of paying for a subscription to CBS's streaming service so they can watch the new "Star Trek" TV series. Instead, it could get folded into their Amazon Prime membership, for which CBS would get to dip its beak, and Amazon would see Prime become even more attractive.

    One could say that Amazon continues to boldly go...

    One other thought. Y'think it is possible that Amazon at some point gets into the business of bidding on live sporting events, and then streaming them live via its Prime video services?

    I wouldn't bet against it.

    Published on: November 30, 2015

    Haggen announced on Wednesday that it has received approval from the bankruptcy court overseeing its affairs to sell 47 stores to companies that include Albertsons, Smart & Final, Stater Bros., Sprouts, and a number of independents.

    According to the Oregonian, "By mid-November, Haggen had put up 91 of its 164 stores for auction, and the court approved the sale of 36 of the stores in the Southwest region to two California grocers.

    "Haggen had hoped to sell the remaining 55 stores up for auction to a number of bidders, including Albertsons. Albertsons previously owned several of the stores it wants to buy back. Of those 55 Haggen stores, the court Wednesday approved deals for 47. It's unclear what will become of the other eight."
    KC's View:

    Published on: November 30, 2015

    The Wall Street Journal reports that Tesco "has reached agreement in principle to pay $12 million to settle a class-action lawsuit in New York over an accounting scandal that tarnished the retailer’s reputation.

    "The lawsuit against Tesco and some of its former directors was launched on behalf of the holders of the No. 1 U.K. grocery chain’s American depositary receipts, about 2% of its total shareholder base."

    The lawsuit - one of two filed against Tesco in the US, and the only one settled to this point - essentially argued that the company defrauded its shareholders when it under-reported costs and over-reported revenues. While Tesco is writing a $12 million check, as part of the settlement it is not admitting any liability.
    KC's View:
    Nothing says "we aren't liable" like a $12 million check.

    The UK's Serious Fraud Office is said to be close to the point where it will issue a report about Tesco's misdeeds. I suspect the second US lawsuit will get settled before that report becomes public ... and I hope that when the report is issued, it deals not just with the company's actions under former CEO Philip Clarke, but also the culture that was created under his predecessor, Sir Terry Leahy.

    Published on: November 30, 2015

    • The Associated Press has an interview with Sandy Douglas, president of Coke North America, in which he addresses the apparent loss of credibility that the company has suffered in the wake of revelations that it underwrote so-called objective advocacy groups that then supported its contention that exercise - not reducing the consumption of sugary drinks - is the best way to fight the obesity crisis.

    Douglas says that the company "is hoping to change its 'adversarial' relationship with public health advocates," and that "it is not Coke's goal to get people to overconsume soda." However, he also says that "if folks are saying the moderate consumption of our beverages is causing obesity, then we're going to argue with that, because it's not true."
    KC's View:

    Published on: November 30, 2015

    Last week, MNB took note of a Bloomberg Businessweek cover story about how Walmart in 2012 responded to organized labor protests during Black Friday sales events with what some might call a heavy hand: "it hired an intelligence-gathering service from Lockheed Martin, contacted the FBI, staffed up its labor hotline, ranked stores by labor activity, and kept eyes on employees (and activists) prominent in the group. During that time, about 100 workers were actively involved in recruiting for OUR Walmart, but employees (or associates, as they’re called at Walmart) across the company were watched; the briefest conversations were reported to the 'home office,' as Walmart calls its headquarters in Bentonville, Ark."

    The entire MNB story can be read here.

    My comment:

    I cannot help but feel like this is overkill on Walmart's part, and perhaps indicative of a broader lack of faith in its people, no matter what they say. I'm also sure that Walmart is not alone in such efforts ... I'm not a conspiracy theorist, but it seems to me that the combination of technology and corporate entitlement almost certainly means a lot of big companies conduct this kind of surveillance.

    Doesn't make me feel any better. Or any safer. And I think the "safety and security" argument is a little specious ... it really is about protecting the bottom line.

    MNB reader Tom Robbins responded:

    Having been in the same "squeeze" at a small company (20 stores) and quite large (1000+stores), it's not just the bottom line you are trying to protect but the very fabric, culture and public persona that have taken years to hone.

    My vote is with Walmart on this one.

    MNB reader Frederic Van Roie chimed in:

    It is easy for you to play Monday morning quarter back, like the unions have always been known for their professionalism.... and what is wrong with protecting the bottom line?

    And, from another reader:

    One more reason for bright minds not to work there...they are oblivious to the dangers of exposing their real feelings and regard for employees.

    First of all, let's be clear ... it is very easy for me to play Monday morning quarterback. But that is kind of what I do for a living, isn't it? Criticizing me for playing Monday morning quarterback is like criticizing the sky for being blue.

    Second ... I don't think there is anything wrong with protecting the bottom line. I also think that there's nothing wrong with protecting a company's culture. And I would never suggest that Walmart's opponents always play the game according to Hoyle. (I have my own suspicions about the bomb threats called into various Walmart stores over the weekend.)

    But ... I think it is perfectly reasonable to suggest that companies that spy on their own employees betray a broader lack of faith in those people. I wouldn't want to work for a company like that. (Though, to be fair, I wouldn't want to work for many companies. To quote Raymond Chandler, "I test very high on insubordination…")

    I also think it is possible that the next generation of employees, people far younger than I am, will look askance at companies that engage in such activities. Which could put such companies at a disadvantage when trying to hire the best and the brightest.

    Got the following email from MNB reader Rich Heiland, responding to Michael Sansolo's recent column about the efficacy of Waze, Uber, and the lessons they teach us:

    We are in Mexico City, where my daughter is on the US Embassy staff.

    My WAZE, much to my delight, works on my phone here and I can use it fairly well for walking.

    As for riding, Uber all the way. My daughter has been using it exclusively on days she can't bike to the Embassy. We have used it a half-dozen times so far around the city. My take - never had a wait more then 10 minutes. Spotless vehicles with water and munchies. Clean, courteous drivers - all men so far - who speak enough English to go with what Spanish we speak. On very crowded streets, stop and  hop out - not having to pay on the spot helps. And, it's much cheaper than the licensed cabs here.

    I am not sure how the cabs here react to Uber but my take is that for Americans overseas, it certainly should be a top option.

    Along the same lines, from a reader, regarding Airbnb:

    First experience a couple of weeks ago with Airbnb.  Excellent first impression!  Two bedroom / Two bath condo in Toronto in an upscale neighborhood on the water with indoor parking, at a very reasonable rate.  Couldn’t be more impressed.  And, used Uber extensively to get around.  Technology is changing everything.


    Here's an email about the drone revolution, written before the Amazon video that we highlight above:

    This is absolutely hysterical and for people to think using drones in a freight delivery capacity in any form is good....I would like to find out exactly what they are smoking. I can see it now...the sky is littered with bug looking objects buzzing through the air carrying packages and whatnot. Am I the only one who sees the absurdity in that picture...not to mention the jobs lost, the obvious temptation for theft and criminal joy of knocking these things out of the sky, along with a hackers dream of taking control. Drones are stupid at best...and will be used for spying at least!

    I'm pretty sure that they already are being used for spying ... probably by our own government, on its own people.

    I'm also pretty sure that the regulatory process will have to deal with the legitimate issues that many will raise. But that doesn't mean the revolution won't happen.

    From another reader, on the same subject:

    Don’t know where to go with this story, but it struck me as odd that someone thinks that drones are more dangerous than guns…so let’s regulate them more heavily?!  On what planet do we live?

    We had a story last week about how Sonic is going to test deliveries, and I joked about this being clear additional evidence of a trend. To which MNB reader John Lloyd responded:

    Yea. The trend is to deliver goods I would not buy. And this will bring...?

    My suggestion, with all due respect, is that we should not make the mistake of judging trends solely on the basis of whether they are relevant to us. That's what's called epistemic closure ... and the world - and the definition of relevance - is a lot broader and wider than that.

    Responding to last Wednesday's Eye-Opener about a new shoe company founded by the husband of one of my Portland State University students, designed to draw attention to various social issues. Common Ground is at its core a footwear company, but more importantly, it is designed to "inspire steps, regardless of their size, that contribute to progress." There are four basic collections, with each one focusing on a specific issue - gender equality, gun violence, immigration, and marriage equality.

    MNB reader Joe Gilman was not impressed:

    More Nonsense! really! are shoes going to change anything? Maybe they should make a shoe with Hashtags, so we can defeat ISIS and Boko Haram and get our girls back? I lean Democratic, but these are just so silly and made in South Korea, the land of gender equality, and marriage equality and all that good stuff.

    Please give me a break.

    I don't agree, but that's what makes the world go 'round.

    People can choose to patronize this company or not, based on its position on social responsibility or not, and based on the quality of its products or not. But I think it is a good thing when companies want to be relevant to what's happening in the outside world. If I shop at Orvis, where they donate 5 percent of profits to environmental causes, or REI, where they partner with nonprofits that invest in the nation's outdoor recreational spaces, I feel better about the experience ... and I may choose to go there instead of alternatives in part because of those positions.

    Not everybody agrees, but that's okay.
    KC's View:

    Published on: November 30, 2015

    In Week Twelve of National Football League action...

    Eagles 14
    Lions 45

    Panthers 33
    Cowboys 14

    Bears 17
    Packers 13

    Bills 22
    Chiefs 30

    Rams 7
    Bengals 31

    Saints 6
    Texans 24

    Buccaneers 12
    Colts 25

    Chargers 31
    Jaguars 25

    Dolphins 20
    Jets 38

    Vikings 20
    Falcons 10

    Giants 14
    Redskins 20

    Raiders 24
    Titans 21

    Cardinals 19
    49ers 13

    Steelers 30
    Seahawks 39

    Patriots 24
    Broncos 30
    KC's View: