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    Published on: December 4, 2015

    by Kevin Coupe

    From here, it does not seem like an enormous leap to a Star Trek-style holodeck.

    Bloomberg reports that Amazon this week "received two patents that outline a set of technologies that would project a digital world into someone’s room and let them navigate it by moving their bodies, or using some form of camera or headset to interact with it using virtual reality.

    "One patent for 'object tracking in a 3-dimensional environment' would allow people to control devices through hand gestures that are monitored by cameras recognizing different parts of the hand. The technology attempts to solve the problem of tracking a user’s hand over time to control devices.

    "The other patent for 'reflector-based depth mapping of a scene,' would use computer projections to transform a room into a virtual setting that responds to the user’s senses. The system would accomplish this with a single light source, differentiating it from existing technologies that rely on multiple light sources that have to be frequently re-calibrated, making them expensive, according to the patent."

    What this tells us, I think, that the same mentality that drove Amazon to invest in drones and turn them from a tease/afterthought on "60 Minutes" into a delivery concept that has captured many people's imaginations and created no small amount of controversy, is focused on redefining the concept of interactivity.

    It also tells me that I need to start checking Amazon on a regular basis to see if they are selling actual holodecks, or maybe food replicators.

    Because, as Jean-Luc Picard would say, everything is impossible, until it is not.

    It is, and will continue to be, an Eye-Opener.
    KC's View:

    Published on: December 4, 2015

    Kroger announced yesterday that its Q3 earnings were up 23 percent to $428 million, from $345 million during the same period a year ago.

    The Cincinnati Business Courier writes that "Kroger cranked out its industry-leading 48th consecutive quarter of same-store sales growth by posting a 5.4 percent increase, excluding fuel sales. That figure is also among the best in the supermarket business ... The improved results came as a result of tighter expenses, which improved by 0.23 percentage points of sales thanks to controlled costs. Kroger's sales growth – revenue excluding fuel climbed 5.5 percent – and improved margins drove gains, too."

    Bloomberg responded to the strong performance with a story analyzing Kroger's performance, noting that even as many bricks-and-mortar stores struggle, Kroger "has been quietly growing its empire to become the second-largest U.S. retailer by sales after almighty Walmart, which derives 56 percent of its sales from groceries."

    How? "Kroger was one of the first traditional grocers to dive into customer buying habits and customized shopper communications through a recently ended 12-year partnership with data analytics firm Dunnhumby," the story says. "It was also an early mover into natural and organic foods, eating directly into Whole Foods' customer base."

    And, the story goes on, "In a move that directly mimics Walmart's supercenter model, Kroger added aisles of high-margin general merchandise such as $84 portable fireplaces. It built health clinics and in-store pharmacies, which now make up about 8 percent of revenue ... Kroger has proven it has the foresight to jump on rapidly-shifting changes in consumer behavior long before its competitors -- a model for preserving the old-fashioned grocery store."

    There seems to be no limit to how much Kroger is willing to grow, Bloomberg writes: "The company, which only operates in 34 states, is now on the hunt for deals to expand its presence online and across the country."

    Interestingly, the Cincinnati Enquirer had a story the other day saying that "with half a dozen deals in two years, Kroger is on an acquisition spree," and that its decision to buy Roundy's for $800 million "could also signal a new willingness to acquire troubled rivals that it has avoided for years."
    KC's View:
    For me, the key to Kroger's success always has been actionable data, actually acted upon. That's not to diminish the importance of multiple formats and banners, and a culture that seems to value both efficacy and efficiency.

    If a retailer wants to be effective, it has to have as much granular information possible about each of its customers, and then act upon it. Retailers that don't do this simply must accept the fact that their customers will be vulnerable, even receptive, to entreaties from retailers that invest in knowledge-based marketing.

    Published on: December 4, 2015

    Bloomberg reports that for Chipotle, the cost of dealing with an E. coli outbreak could be its commitment to buying food locally whenever possible.

    The outbreak has taken place in a number of markets around the US and sickened dozens of people; for a time, the company closed all of its units in Washington State and Oregon while it dealt with the situation. But in order to resolve any lingering questions and re-establish some level of trust and credibility, that may not be enough.

    “We have elevated requirements for all of our produce suppliers (chiefly in the area of testing of ingredients) and we are not sure that all of the current local suppliers will be able to meet those elevated protocols,” Chipotle spokesman Chris Arnold tells Bloomberg.

    The story notes that "Chipotle changed its website last month, taking down a description about buying locally and replacing it with a message on long-term supplier relationships. Though the company is still contemplating its plans for the local-produce efforts, the move cuts to the heart of Chipotle’s culture and marketing. It began the program in 2008 in a bid to support local farms and sustainable agriculture ... stepping back from its buying-local pledge could affect how the company markets itself. The company has said in the past that it’s steadily expanded the effort, buying millions of pounds of produce from regional farms. The idea is to serve vegetables that are grown within 350 miles of individual restaurants."
    KC's View:
    Local is good. Safe is better. No debate.

    As much as people may appreciate Chipotle's desire to source locally, I'm not sure many will resist any adjustments the company has to make in order to assure its patrons that the food they are eating won't make them sick. If it can move from there to educating and helping local suppliers meet required safety standards, that's even better ... but the first priority has to be consumer safety.

    Published on: December 4, 2015

    USA Today reports that RadioShack, desperate to regain some semblance of relevance in a technology world that seems to have passed it by, has named entertainment mogul Nick Cannon as its chief creative officer.

    The story says that Cannon "has carved out a niche for himself in the entertainment industry as not only a performer, but also as a businessman and entrepreneur, particularly in electronics ... Cannon will work with RadioShack to develop exclusive products and advance the company's education and STEM (science, technology, engineering, math) initiatives. He is also slated to put on events and performances, as well as curate playlists for the company's 1,733 stores."

    The story goes on: "Cannon will have an office at RadioShack's headquarters in Fort Worth, Texas and plans to be there 'as much as I possibly can.'

    "Cannon will have to fit in time for RadioShack while also addressing many other duties. He hosts NBC's 'America's Got Talent,' is the chairman of TeenNick for Nickelodeon and founder of production agency, Ncredible Entertainment. Through Ncredible, he released his own 8" Android tablet and developed a line of headphones with electronics company Monster. This month, Cannon will start filming a new Nickelodeon series with Monster, where child and teen entrepreneurs pitch their products for potential backing."
    KC's View:
    I have no idea whether this is a PR deal, or something real ... but I also have to admit that I really had no idea who Nick Cannon was until the other night, when he was on 'The Daily Show" to promote his role in a new Spike Lee movie. This is, by the way, more a reflection of my growing cultural irrelevance than it is of Cannon's competence and expertise.

    I do have to wonder whether his presence is enough to lure young people into RadioShack stores. But at least management there seems to be going beyond the usual suspects in seeking inspiration and maybe even perspiration.

    Published on: December 4, 2015

    Amazon sometimes is criticized by nonbelievers for being impersonal in its retailing approach, but a Seattle Times piece illustrates that this is not an accurate depiction, especially when it comes to customer service.

    " founder and Chief Executive Jeff Bezos has said that customer contact with Amazon, such as the one over missing email, usually represents a 'defect' in the online retail giant's operations," the story says. "But those contacts are inevitable. That’s why Amazon has a team of more than 500 here answering calls, replying to tweets and chatting via video to salve customers’ anger and resolve their problems. And the company has added hundreds more temporary reps for the holiday season.

    "There’s no shortage of problems. The center, one of six Amazon has in the United States, responds to thousands of customer calls a day, according to the company. Often, customers want tech support for Amazon’s various devices. Sometimes, they need help clarifying bills. And plenty of times, customers want to know why their packages are late, and when they can expect delivery.

    "And yet, with so many 'defects,' Amazon consistently ranks among the top retailers when it comes to customer satisfaction, from organizations such as customer research group Temkin, Zogby Analytics, and the Institute of Customer Service in the United Kingdom."

    Definitely worth reading, and you can do so by clicking here.
    KC's View:

    Published on: December 4, 2015

    The Boston Globe reports that LL Bean, already dealing with enormous demand for its signature Bean Boots - it already has sold 500,000 this year, 50,000 of which are on backorder, and the company concedes that a lot of people won;t get them in time for Christmas - has another demand issue.

    In this case, it is for the company's iconic Boat and Tote canvas bags - the company is on track to sell more than 600,000 this year, compared to 450,000 in 2014, and the company is struggling to keep pace. What's interesting is that a majority of the new orders seem to be coming from Japan, where the bags are considered to be a fashion item.

    The story notes that the "made in the USA" story behind the bags seems to have enormous appeal in Japan; 60 percent of them are shipped with English language monograms. (LL Bean doesn't offer Japanese monograms, though it does have a Japanese language catalog and 21 stores there.)

    But as with the boots, despite the fact that LL Bean could sell a lot more bags at a higher margin if it outsourced their production, the company is resolute about keeping their manufacture in-house.

    "Going on the assumption that high demand for both tote bags and boots will continue," the Globe reports, "LL Bean plans to invest an additional $1 million in new stitching machinery in 2016 ... And they plan to hire an additional 50 employees in the coming months.

    But learning to make Bean products doesn’t happen overnight. For new hires to be able to make the company’s signature boots, they first have to undergo a 26-week training program."
    KC's View:
    There is a lot to learn here about what is important, and what is not.

    Published on: December 4, 2015

    Reuters reports that Target Corp. has agreed to settle claims related to its 2013 data breach - which compromised at least 40 million credit cards - for $39.4 million. According to the story, the settlement "resolves class-action claims by lenders seeking to hold Target responsible for their costs to reimburse fraudulent charges and issue new credit and debit cards."

    Earlier this year, the story says, "Target agreed to pay Visa Inc card issuers as much as $67 million over the breach and reached a $10 million settlement with shoppers."
    KC's View:

    Published on: December 4, 2015

    • Subway yesterday hired Joseph Tripodi, the former Chief Marketing and Commercial Officer at Coca-Cola, to be its new Chief Marketing Officer. He succeeds Tony Pace, who announced last summer his plans to step down.

    Tripodi's immediate task will be to reinvigorate Subway's image in the wake of the child pornography convictions of of Jared Fogle, the chain's longtime spokesman.

    • Dollar General said yesterday that it has promoted John W. Garratt, the company's senior vice president of finance and strategy who has been serving as interim CFO, to be its executive vice president and chief financial officer.
    KC's View:

    Published on: December 4, 2015

    I was sad to learn this week that Bob Stiles, the former president of Gelson's (from 1996 to 2011), who started there as a grocery clerk and worked for the chain for more than a half-century, has passed away.

    I'd known Bob for years, since my early days of writing about food retailing. I found him to be an enormously engaging man - always smiling, supportive, and with a deep belief in what he saw as the foundational tenets of grocery retailing in general, and Gelson's in particular. And whenever I saw him, he always wanted to talk about baseball ... which made him additionally endearing.

    Good guy. I liked him a lot. And the industry is poorer for his loss.
    KC's View:

    Published on: December 4, 2015

    ...will return next week.
    KC's View:

    Published on: December 4, 2015

    In Thursday Night Football, the Green Bay Packers defeated the Detroit Lions 27-23.
    KC's View:

    Published on: December 4, 2015

    To be honest, when I first heard that Sylvester Stallone was going to be playing Rocky Balboa yet again in Creed, which was going to focus on Adonis Johnson, the illegitimate son of former Rocky opponent Apollo Creed, I was not enthusiastic. This would be the seventh film in the series, which started back when I was in college; the fourth and fifth movie were jokes, I thought, and Rocky Balboa, which came out in 2006, I thought of as an unnecessary but sort of sweet swan song for a much-loved character.

    I wasn't alone in feeling this way about Creed. I also was utterly, completely wrong.

    Creed, in fact, is a terrific movie - exciting, touching, and referential to the original without engaging in bathos or manipulation.

    The absolutely terrific Michael B. Jordan stars as Adonis, who never knew his father; Apollo Creed died before he was born, and Adonis ended up in the system, being put in and thrown out of a series of foster homes before being rescued and raised by Apollo Creed's widow, played by Phylicia Rashad, who only wants him never to participate in the sport that killed her husband. But fighting is in Adonis's blood and he finally travels from Los Angeles to Philadelphia, where he hopes a former fighter named Rocky - the guy who took Apollo's championship away from him - will train him.

    Go figure - as the aging Rocky, whose friends have all passed away and who now runs a small Italian restaurant and lives in near obscurity, Stallone does perhaps the best work of his career, capturing a kind of reluctant nobility in the character that helped define him. As his career developed, Stallone's characters often seemed to be defined by hard edges and ego, but in this performance there is both charm and an unexpected vulnerability that we haven't seen before that are quite appealing. And, because he is very much a supporting character in this film - which is the first in the series that he hasn't written, and only the second that he hasn't directed - Stallone seems as freed up and loose as he ever has. It is a good look for him.

    The script, by Ryan Coogler and Aaron Covington, touches bases that you'd expect a boxing movie like this to touch - the training, the personal challenges, the romance, the bouts - but does it in a way that makes them seem fresh. Even though the movie, directed by Coogler, reinterprets some familiar scenes from the original Rocky, somehow it all seems fresh and touching and exciting.

    I won't explain more of the plot to you, because I hate it when reviewers say too much. But I will urge you, strongly, to go see Creed. It is the best kind of popular entertainment - a movie that will leave you cheering and maybe even tearing up a bit. Creed is a movie about legacies ... about Apollo Creed's, about Adonis Johnson's, about Rocky Balboa's, and, finally, about Sylvester Stallone's.

    By the way, for MNB newbies ... I have vivid memories of the very first Rocky .... because I was in the very first audience that saw it.

    I've told this story before, but I hope you'll indulge me...

    Back when I was a senior and a film major at Loyola Marymount University in late 1976, I was taking a film criticism class that met one night a week. We would regularly be shown a movie that had not yet been released, we could get a chance to listen to and ask questions of someone connected to the film, and then were required to write a series of essays about what we’d learned. I loved that class – it was everything I loved to do, and I actually got college credit for it.

    One night, as we showed up for class, it would be fair to say that we weren’t thrilled about the possibilities. All we knew was that we were going to see a boxing movie starring some guy named Sylvester.

    The movie, of course, was Rocky. And since we were the first audience to see a finished print, we had no expectations, no preconceptions. And to say we were blown away would be an understatement. At the end of that film, the entire class was on its feet, cheering and crying and as engaged with the film as we could possibly be.

    And when the lights came up, Stallone walked in, and the place went wild all over again. He seemed to be both shy and surprised that night ... though I'm not sure he ever was again ... and he spent well over an hour doing a Q&A.

    That such a movie even got made was amazing. The studio wanted to buy the script from Stallone and put Burt Reynolds, James Caan or Ryan O'Neal in it ... but he refused to sell the script unless he could also star in it. When they finally agreed, they made the movie for what even then was the paltry sum of $900,000.

    I can even find two lessons in here for businesses.

    First, it is important not to always go with proven talent. Sometimes, the person who has the least experience may have the most potential ... and they'll almost always be hungrier.

    Second, never underestimate the importance of surprise. I’m not sure how many retailers say to themselves, “Let’s find a way to surprise the customer today.” But I think it is always worth doing.

    It always is a good week when I find a new Oregon Pinot Noir I've never had before ... and this was a good week. I opened a bottle of 2012 Benton Lane Pinot Noir from Oregon's Willamette Valley, and it was delicious and smooth and absolutely perfect with a lamb and artichoke stew that I made. I heartily recommend it.

    That's it for this week. Have a great weekend, and I'll see you Monday.

    KC's View: